Today I received a trader's-heart breaking email from a good friend. He just went live after weeks of making sure he was ready on a demo account. He has a bright future ahead as a trader. But today, he got emotional and lost 3% of his account. If you've ever been in the same position, it can be a devastating feeling. My friend wondered if he was just going to have to "hang it up" and do something else. I know that feeling very well -- and remember asking myself the same question. This is the email that I wrote back.
1. Get over it. You are going to have mistakes like this along the way.
2. So what? One trade does not a good or bad trader make. You are not your trades. You direct them, and every once in a while, no matter what, you are a putz. This does not mean you are a putz all the time. You probably made a mistake at work in year 5 of your job, but that did not put in question your ability to work at all.
3. If you lost 10% then I would tell you that you and I need to have a phone call and a heart to heart. But you didn't even get close to that. And you lost on a day when a zillion other people lost, in a week when a zillion other people lost. This is the toughest week for short term, new york session trading that we have had in at least 4 months.
4. You should write down and record in a journal this experience today. It will sear it deeper into your memory. You should also print off a view of the charts and a view of your account statement. Look at it every once in a while.
5. Next week the home sales reports should be very good for trading. The rest of this week could be good or lame, but it is surely not going to be the easiest week ever.
6. Were you mixing systems or methods today? Just wondering. You need to go back and look at the charts from today and re-trade. Re-trade it over and over as if you did what you know you should do. Do the same for a few days back, over and over. One candle at a time. You will be so much better off if you can go back and re-create the moment and play it with your head on straight.
7. Next to last of all, please remember what I said earlier: You are not your trades. You are going to make 1,000 more trades after this and you've made who knows how many before this. A day like this is frustrating, and you should spend some time looking over the 15 min charts (or whatever charts you use in the morning) and testing and re-trading the day. But this does not call into question your entire ability to trade for a living.
8. Last of last of all, you have to realize that I make emotional trades too. I lose money sometimes doing stupid things that I should not do. Does it bother me? Damn right it does! Does it mean that I shouldn't trade? No! We all have bad days. They are not more meaningful than the tens of good days that you have already had.
Rob
Comments
Great essay, great advice, great dilemma. I could have written the heartbreaking email but got lucky and managed to get out with a minor loss and a gain overall for the week.
thank you so much,
allison
Posted by: allison wilcox | May 18, 2006 10:58 PM