This is going to be one of those off the cuff and potentially unorganized blogs. I apologize now but this is going to be one of the more emotional blogs I’ve written. Being a trader is a very interesting thing to be. No two days are the same and we're constantly having lemons thrown at us...which we’re expected to make lemonade with.
Being a Trader AND a trading educator is a doubly (yes doubly) more interesting thing to be. As an educator there is an expectation to coach people through this insane business. The attempt is to show them the promised land of more time and money. Something we all long for . As an educator it's on me to teach you what to buy, when, how to manage risk and where to take profits.
In all honesty that's not the tough part. Trying to preach discipline, how to be resilient and how to stay psychologically focused is a whole different ball game. That...truly is the key to trading successfully. That...truly is the key to trading longevity! One could write a thousand books on discipline and the importance of maintaining it while trading. One could also write a thousand books on what to do when you're in a trading funk. I'm going to attempt to write a short story that conceptually covers both. Give me some room here.
In the last two months I have recorded some decent results and returns. Last week I was a collective 1,077% (not a typo)...on the WEEK! . Now those are larger than average returns.
My experience towards trading knows when I'm not trading well. Losses get away from me and I start to randomly want to size up (increasing losses) and trade MORE, and I start to take revenge trades. As a relatively seasoned trader I know all of this is wrong but I engage anyway. After all, I am only human! As I was sitting trading today I took yet another loss which led to my P/L dipping even further. I felt totally off. I know that I was literally throwing capital away. Then it hit me! I asked myself a simple question…”are you doing EXACTLY what you have been doing that has led to you past successes”. The answer was NO. I stepped away from my desk and reviewed my trading plan. I then went into a different room, rewrote my trading plan down on a fresh piece of paper from heart and refreshed myself of my own Strategy. From there I went back to my trading station and got back to work. I went 3 for 3 on some shorts and made back every loss I took for the month. I rebalanced my P/L and closed the day out in a net positive position for the month.
There is an old saying in trading: “cut losers quickly”. That is obviously geared towards positions but in my case it can also be used towards your mentality and head space towards trading. If you're not following your strategy you're clearly doing something that you shouldn't be doing. That is a “loser” that needs to be cut. There is a ton of value in reviewing your trading every few days to make sure that you're on track. I learned today, after my 3 killer trades, that I had been sitting on two stocks that I wanted to short. I kept hitting them both short and every time I was stopped out. I started to hit them harder and more size to make back what I thought I was “owed”. The fact is that with every trade and session that went against me the profile for a short had changed! I was late to click into that (hence the losses). When I got back on track I got back to doing what I do...killing the market and making great trades! Don't be afraid to be wrong. Drop the ego. Admit your shortcomings, adjust and get back to it!!