Absolutely spot on. You get it back by chipping away - hitting for average, bloop singles, just boinking away at it. And then when you do get it back ( and you will ), you chastise yourself subconsciencely for not just dinking away all along and dispense with the nonsense ( the giant position that you knew in your heart-of-hearts was bullshit to begin with because it was surely not all initiated within the designs of your initial strategy - face it, you got stubborn and overly opinionated. You were arguing with the market, telling the market that you are right and the market is just plain wrong ). I know it sounds cliche, but please keep a detailed daily trading journal. You survive and then ultimately make a very good living in this business by not repeating mistakes. If you can manage to not repeat mistakes, it is the functional equivalent of profit. Lever your positive attributes, destroy and bury your crappy impulsive bad habits. We all have them. The five inches between your ears is your only obstacle to the success you so deperately crave, quite frankly.
The last time I tried to keep a trading journal the pages ended either blank or full of pizza and amazon order numbers...LOL.I don't know what to put in it.Thanks for the suggestion though. I have generally good discipline, but is true that I sometimes hold for too long when I am slightly losing on a position. I never average down but I am not treating a position that is down 3 ticks the same as a position that is up 3 ticks. I have to correct that.
By the way , Bone, since you have been in this business for a long time,what is the biggest for you? Max win or max loss day?( not expecting numbers )
In terms of my personal account - Max Win, 2004, Euribor vs. Schatz off a civilian unemployment number. AutoSpreader. Size. In terms of my professional desk career, I've had several huge days ( months, actually ) trading OTC bilateral electricity for a utility and later power and nat gas swaps for a hedge fund. So, big differences between OPM and my own, but I have never had "blow out" days where a max loss was larger than a max win. My own personal rule is that I will give up a Day or a Week's worth of P&L, but never a Month.
Now this is getting weird... 2 weeks of losses in a row...Am I losing it? It was mostly because I closed some long term positions( Be aware FCOJ is getting really illiquid 2-3 days before first notice... Got killed on that one. ) and also because I tried some new scalping strategies... This one was retarded. What is the best way to trade after your biggest loss ever? Try new strategies? Wrong. Only trade your reliable strategies with parcimony? Right. See you next week for the next episode. ( I really hope I won't post anything which means I am back on track ).
My worst day (so far) was -$320k, last year. Very hard to gain perspective on life after a day like that, haha. I really had to work to keep myself distracted... read a lot of fun books instead of looking at my numbers.
I've had a number of high 5-figure down days (it was only a 1.5% loss but the size of the number still shakes you). The best way to approach an event like this is to take a week off and let your emotions clear. Then examine what happened to cause the massive down day and correct the situation. Take a hard honest look -- easier said than done.
Interesting... Since you apparently do some volatility arb between illiquid assets( softs, heating oil options... ), what went wrong? Is it just "the market"( and your strategy implies such losses at time ) or was it because of some random event( Some exchange rules forgotten, no liquidity...)?
I'm still net short gamma, so a big move = bad news for me. That's the name of the game, I will *always* have a negative skew in my outcome distribution. In this specific case, big USDA report left the grains locked limit up. Corn was held limit up 2 days in a row, actually. And me, stupidly, didn't even realize the report was coming... I had no hedges on, and I left a bunch of deep OTM options on the table. Pretty much a worst case scenario. It was a -9% day... but at least I was able to use it as a learning opportunity. It totally changed my risk management techniques. (At the time, I wasn't sure if I'd learn anything from it... other than the fact I might not want to do this any more.) PS. I don't do anything "illiquid", really. The instruments I trade have adequate liquidity, especially in the futures.
October or November last year? ... News triggers closed markets(or stopped at limit)? Big trouble ahead.