Last Tuesday, I finished my thirty-third live monthly trading session for BK and I felt great. I managed to bank more than 40 pips in less than two hours, putting on successful trades in wildly volatile markets. But as the adrenaline wore off, I glanced at my own account and immediately grew depressed. The graphical markings on my chart looked like a scene from St. Valentine’s day massacre. They were riddled with red stop-out dots, while the green take profit marks were few and far between. Why can't I always trade in my own account the way I do in live trading? Here is why.

Preparation

I spend a good hour before each live trading session reviewing the latest headlines, the latest charts and the upcoming calendar event risks. I generally have a very good idea of market expectations and the principal themes that are dominating trade that day.

Reaction

I never try to guess the data. In live trading, I always trade after the fact once the information is released and I can analyze its implications. Generally if the data is not a major surprise that will create dislocation in price, I will not trade it. In live trade trading, I don’t anticipate. I react quickly because I have already thought through most of the trading scenarios.

Selection

In live trading, I often trade crosses rather than the majors. My goal is always to pair the strongest currency against the weakest to give myself the highest probability of success. Thus, if I am bullish GBP after strong UK data, I may actually sell EUR/GBP instead of buying GBP/USD if I feel that the euro is especially vulnerable to a sell-off that day.

Ruthless Money Management

I always trade with a stop, but more importantly, I am obsessive about locking in profit the moment I am ahead on the trade. Generally, the moment I get up 10-15 points up on the position, I take off half the trade and trail the rest. This way I minimize the possibility of turning a winner into a loser.

Accountability

Unlike most human beings who are horrified of being judged in public, I actually thrive on the experience. I love holding myself accountable to hundreds of people and am therefore much more dedicated to making sure that I succeed when I trade publicly than when I trade only for myself. This perhaps is the crux of the issue. When I trade live, I take it very seriously. When I trade for myself, I am not as vigilant.

However, after much soul searching, my conclusion may actually surprise you. To have long-term success in trading, I actually think you need to practice both approaches. My personal account, which is often a hodgepodge of impulsive, ridiculous trades, is also a tremendous font of creativity and inspiration. By allowing myself to explore everything, I am unafraid to try anything and that is often how I come up with my best trading setups. So in the end, I think the only rational solution is to have two accounts. One small account where you can experiment to your heart's content and another large account for your serious trades. Otherwise, I think we are just fighting human nature.

Boris Schlossberg serves as director of currency research at GFT, and runs bktraderfx.com.