I think sometimes what people can't cope with is - you have to take losses, big losses too. It could be your successful strategies were crap and time has proven that. It could be your strategy was good at one time and the edge went away - markets adjust and kill edges. If it's about "how good am I" - take some comfort in looking at hedge fund returns over the last few years (negative) or for the Buffett buy-and-hold crowd - the inflation adjusted return of the S&P (35% in 15 years!). P&L doesn't tell the story, any more than saying - the market is up 5% YTD. That only matters if you bought on Jan 1st. The important question - do you want to be doing this. The important metric - how many years did you stay alive doing this. Even P&L over your lifetime, you won't take it with you when you die. Is this something you can spend your life - enjoy spending your life doing - is the question.
It seems to me 2 years was too short a learning period. Even with the best mentor for the method and the money parts, your mind still needs time to get used to the ups and downs of a trading account. Now my own 2 cents: trade sim for a month, then 0.5 % and 1% only when you are back on your feet. 2 % is way too much risk when you are in the mist.
You probably traded aggressively on your way up, and on the way down - multiple correlated positions, significant leverage. When conditions are right, you can make it as fast as you did, and when things change - the descent could be even more rapid. Been there done that. Of course the biggest regret at this time is not pulling something out as the market gave you that run. Trade smaller, take only your higher conviction trades, and analyze your past trades to see where the "mathematical optimum" risk strategy should have been: like number of concurrent positions, size as fraction of account etc and adjust accordingly. It is an unending battle between GREED (make it fast because you know you have the edge) and FEAR (losing what you have). Hopefully you can find the balance somewhere.
You should have sized way the fuck down about $500k ago. When you start sucking thats the clue to size down and try to be profitable on small size. If you cant do it on small size theres probably little chance youre going to be profitable on big size. Id almost say your too far gone to come back from this drawdown by trading it away. You should probably take a big break to clear your head again. Your psyche is probably too fucked up to continue on same path so drastic measures must be taken to avoid complete blowout. Id recomend either paper trading for a while or really small size trading 1 lots on futures. Maybe consider getting a job to cover your living expenses and focus on trading part time until you get good again. Remember that scared money never wins. Good news is that getting the confidence or edge back is overcomable but its tough and takes time. Also no shame in quitting while youre ahead, if youve made a bunch of money but havent been making new equity highs in a long time its probably a sign your edge is gone and cant develop a new one. Hell im all for preseverance but this game doesnt always reward perseverance and hard work. Most people arent cut out to be traders. So why fight against something that is unnatural for you.
Thanks for sharing your story. I am sure you will be fine and learn from your mistakes. I believe you will be fine and have no issues going forward. Thanks,
I don't think it is Surf, the language doesn't fit (at least that is what my friends from the NSA tell me), but I also don't think this is a true story either. Although reading Neke's journal, it is certainly possible. Maybe a few screenshots or more posts before the revelation could have helped us to believe...Also, the obligatory, look guys I have just made a million bucks post a year ago.... As somebody said earlier, the downsizing moment was 500K ago...
Quick comments and thoughts: 1. You absolutely need to take a break and get your mind back into neutral mode. Right now your confidence is crushed and your losses have affirmed the fact that you're a loser (no offense). So, when trading now, you're conforming to that expectation of being a loser and you're also trading not to win, but not to lose. 2. Please consider that your method may have been more random than you'd like to think it to be. And if not, certainly consider the fact that you most likely mastered one set of market conditions and weren't able to adapt. That's the reality of trading. There will always be a trader thriving in one market condition, but the trader who masterfully adapts and switches between a wide variety of market conditions and recognizing the changes as they happen is VERY rare. 3. Risk mangement. 4. With regards to point 2, take a brutal look at your method. I have a hunch it's simply not good enough. If so, work on that until it's good enough. Aim to remove as much discretion as possible. I'll post a nice essay from Marty Schwartz in a separate post. Please read it.
The Losing Streak - Marty Schwartz Every trader faces it. Only the winners know how to handle it. The dreaded losing streak rears its head every so often and attacks every great trader. It eats away at your judgment; it saps your confidence. Sometimes, it can take you so low that you think you`ll never get out. You`re sure that something has gone wrong, that you`ve lost your touch, that you`ll never be a winner again. When you`re in the middle of it, you think it`s never going to end, but mostly, your judgment and rhythm are off and what you have to do is stop and regain your composure. The best way to end a losing streak is to cut your losses and divorce your ego from the game. I learned this lesson many years ago at the crap tables in Vegas. The old clichè says "never send good money after bad", and it`s true. You have to manage your resources and not lose too much of your stake. Many people when they`re losing increase their bets; they double up hoping to win it all back on one roll of the dice. That strategy can be devastating. The best way to stop a losing streak is to STOP! STOP THE LOSSES, STOP THE BLEEDING. Take time off and let your intellect take charge of your emotions; the market will be there when you return. But believe me, this simple advice is much easier to give than to take. In August 1996, I was in the worst losing streak of my career. What was driving me crazy was that I would see the trades, but I was so scared of losing, I wasn`t thinking about winning. This fear of losing was slowing down my reaction time, and while I was seeing everything, I was reacting later and later, which meant that I was taking more risks, not less. What I had to do was to step back and recharge my batteries, but I couldn`t stop. A guy called me and wanted to play some golf. I knew that I needed a break so I told him I`d play eighteen, but as I got up to leave, I couldn`t go out the door without a piece of the action. I couldn`t let the market go up without me. I bought ten lousy contracts and ended up losing twenty-five grand. It ruined my day and further sapped my confidence. You can never shift from reverse to first gear without first going through neutral. YOU MUST FIRST CHANGE THE DIRECTION OF BAD TRADING BY FIRST SHIFTING TO NEUTRAL. YOU MUST STOP. What happens is that as your fear of losing rises, your emotions start to short-circuit your intellect and you no longer have confidence in what you`re doing. Stopping lets your emotions calm down and lets you reestablish your momentum with your intellect. Remember, time is always your ally. Use it to relax, clear your head, and regain your energies. Once you`ve stopped, digested your losses, gone through a period of preparation, and feel comfortable with your work habits and methodology, you`re ready to start trading again. The best way to do that is to trade small and to concentrate on being profitable. DON`T START BY TRYING TO MAKE A KILLING. When I came back, I`d see a trade I liked and I`d do it small with a very tight stop, so if I was wrong, I`d get right out. All the time I kept telling myself, make little profits, make little profits, make little profits. Black ink, black ink, black ink. It`s all psychological. I felt sick and I wanted to make myself feel good again. I wanted to regain my confidence because CONFIDENCE IS ESSENTIAL TO A SUCCESSFUL TRADER. I had three contracts the other day, which is a tiny position for me, but I ended up making $15 000 on them. Fifteen thousand dollars is real money, and I took that and built it into $40,000 the next day, and all of a sudden, I`m hot again, and I feel great. If for some reason this process doesn`t work initially, try it again by stopping longer and coming back to trading even smaller. The most important thing is to protect your trading capital until you can regain your equilibrium and put all the shadows of the losing streak behind you. Losing streak are an unfortunate part of the game, but if you are a good disciplined trader who can shift into neutral, the losing will end and black inc will start to flow again.
4 or 5 years ago I was trading exceptionally for months. Just basic structure and TL's but really relying on me seeing the order flow through the chart. Then missed a few trades I was waiting for that I would have made a killing on and got really annoyed, the male mind defence system kicked in and I ended up losing half account after months of outstanding trading. The psychological aspect was very damaging and took me 12 months to rebuild and recover. So now I have a system that doesn't rely on my opinion of where the markets going to turn or head rather a more mechanical system so removing the more psychological aspects of ego and the mind that can hurt my account but that encompasses price action and order flow (that's had my interest over the years and trading style) and tells me where it wants to go if you know what I mean which took quite a while to put together but worth the effort as it's based on my interest in price and order flow . You need to be able to 'job' the instrument regularly your trading, taking bread and butter trades that pay constantly not just when your running hot . That is a minimum requirement in my opinion. Hope my experience can help in some way..