So, as I sit here an ponder the past few weeks after one of the biggest downswings I think I have ever had, not to mention this coming right off a very nice win streak on a lot of the pot stocks, I have to explain my thoughts to anyone that will listen. These may or may not help you as a current or aspiring trader, but it should definitely give you some food for thought. So here we go.
Its the middle of April 2016 and I had just nailed quite a few moves and was running very very hot, I think somewhere in the area of like 28 out of 30 days in a row green, I was riding high and feeling really really good and just couldn’t miss, this were coming together and I decided to start upping my sizes across all the accounts. This is where I really started to see some of the money come in on the bigger trades, but something happened right at the end of April, I took one decent sized loss and said to myself, “no biggie, I will just grind it back nice and slow” Needless to say, looking back, this was the start of a snowball effect that started me on one of the biggest trading spirals, both mental and $$$ wise I can remember.
With the increased size of my starting and overall positions I found myself getting emotional MUCH faster then I normally would, and this continued to compound itself each trade, each day, each month. You know you are in a horrible frame of mind to trade when, the second you enter a position you just want to get out, and take any tiny dip for a loss, or any tiny perk for a small gain, with no real trade plan in place (hard to say this because I did enter with one, just didn’t follow through).
Maybe it was fear that I would lose more, maybe it was fear that I would be wrong, maybe it was that I would have to dig out of a bigger hole. Whatever it was, I have been trading the worse since 2010 when I knew nothing about trading. The point that I am trying to make is, and I firmly believe this, FRAME OF MIND when you are trading is EVERYTHING. If you go in with the fear that you will lose, you might as well hand your money over to a homeless person, at least they might use it better.
With that, I have stepped away and tried to observe the last few days in the market without trading, with limited success mind you, and it has started to help I feel. I will remind on hiatus until the end of May when I can come back refreshed and ready to trade less (which is more) and focus on bigger picture trades, and maybe even more swing trades (this was how I did so well in the past anyways)
What I want every one that is, or has been trading, new or old to take away from this is that trading is a privilege and you should treat it as such.
This past year has had its great moments more then the bad by far, but sometimes when you feel completely owned by every move the market makes, you need to take a step back and ask yourself, why am I doing this and why? Trading is not easy, and I would firmly say if you make it your career, it will be the hardest job you will ever have. The mental wins and highs you will feel will not stay with you longer and harder as the losses will, but always keep in mind that you are doing this for a reason and that reason is the freedom to do what you want, when you want to.