What do you do when you take a big hit in the markets?

Discussion in 'Psychology' started by MrDinky, Jan 31, 2003.

  1. MrDinky


    I know this is going to generate a lot of stupid responses, but I hope it turns into a constructive thread. We all have our up days and down days but how do you cope when you take a crushing hit in the markets?

    Personally, I try to do something constructive (i.e. exercise) but find I'm so mentally exhausted I can't even do that. Instead, I'll usually end up doing something with my girlfriend, friends, or maybe I'll even call my mom as corny as that might sound. "Hey mom! Guess how much I lost today?"

    Perhaps it was one of those days when you couldn't make a successful trade to save your life. Or maybe it was the day every major bank simultaneously upgraded the company you shorted and held overnight. Whatever the case, the blow to your equity was enough to make you question your system or even your skills as a trader. So what do you do to get your confidence back for the next day?

  2. qdz2


    Let me tell you my experience. It may be not as constructive as you hope. But it worked for me.

    DETACH! Stay away from what made you to lose, of course you may not know what it was at first. AND...blame others instead of yourself! Stay away from blaming yourself. For example, see, how the manipulators can do to you. Later, you will understand why you lost in some degree correctly or incorrectly. For example, how small I am comparing to the market. Never lose all. Always leave some space to detach and come back later.

  3. Take a day off. Get away and do something fun. Nothing related to the market at all.

    Fresh mind makes it a lot easier to come back.
  4. Just do the same thing you do when you have a great day, i.e. call your trading budies and go for a beer, and brag about your trades. Never try to hide your loss, try to get it out by talking to TRADING (very important) friends, they will understand. This will help you to accept the losses, hence becoming humble.
    Now, I find myself talking more about my losing trades than my winning ones.

    Oh! and also a good warm bubble bath and a few days rest help too... :)

    Beside, I think all ET members went thru' what you are going thru', so hang on there, buddy !! :)

  5. rs7


    I remember my first really big losing day. I was trading at a well known prop firm.

    I was I think about a 1000 or 2000 share trader doing a lot of overnights.

    I was loaded up, playing the firm's system. Something happend to make for a disastrous opening against me.

    I lost about 50k.

    That night, the manager of the office called me at home. He asked me how I was doing. I said "fine....what's up".

    He said "how can you be fine when you lost 50k today".

    I said "well, after thinking about it, I figured if I could lose that much, then I can make that much too". He wasn't pleased with this response.

    But of course, he was not a trader. He was a dismal failure in his attempt to be a trader. The owner liked him, and made him a manager.

    He did not have the temperment, obvioulsy to be a trader. Not a risk taker. Not a positive thinker.

    Needless to say, I very shortly after this debacle got used to bigger swings. It is just what happens.

    It also helped that it was not my money. If it had been, maybe I would not have bounced back so easily on the emotional side. But on the trading side, it's part of the game. You win and you lose. The size of the big days (up or down) are only a factor of the size you trade.

    Losing that 50k was a big step for me. Prior to that day I don't think I ever made or lost that much in a month. It took me to the next level. I found I had been undertrading until that day.

  6. lingo480


    Think BIG PICTURE! It's not how well you did today, this week or even this month. It's how well am I doing over time. If you can show a gain each quarter, each year... then you know your truly a consistent and profitable trader.

    Hang in there!

  7. nice attitude
  8. if you're talking about uncontrollable 'disaster events', like a specialist halting a stock you're long in and re-opening it 5 points lower, i'm not really sure. i guess it's part and parcel of being a trader.
    but if you're talking about having massive blow out days, where you just keep losing all day long, well, my advice would be to simply not have them. ie, have a stop loss for the day. that's what i do. it's kind of hard to comment on whether it 'works', because i have nothing to compare it to, but i can tell you that i haven't had a blow out day yet (no surprise). (and, make sure you really press hard when things are going well for you. like this thursday - what a day! but it wouldn't have been if i stopped pressing)
  9. bobcathy1

    bobcathy1 Guest

    When I get hit on the market.....I think about opening a second electrolysis office in Key West and making my $500 a day the easy way!
    I go back and do more studying of tapes and books and pull apart my trades to see what was wrong with them.
    Often my biggest problem is I listen to everyone else, and ignore the obvious signals.
    Got to lead my own parade.
  10. Of the books, seminars, boards, etc. I have seen on trading, the one subject that never seems to be addressed is dealing with a crisis - where "remove your position", "you shouldn't have let this happen", etc. just isn't helpful as you would have already shot those people dead.

    This recently happened to me in a modest futures account where I was on the wrong side of the market with too much size on. I decided that taking the loss was unacceptable and that I would trade my way out of it. I spent hours with sheets of newsprint mapping out scenarios that dealt with ideas like sacrificing some of the position to get buying power, hedging, changing from short term approach and going out to expiration if need be. I even thought of having the police or an investigator find Mr. Bright in Vegas or wherever and wake him up.

    That was a horrible, horrible night to be alone. It sure would have been nice to have a seasoned hand in the co-pilot seat or a whole trading floor of guys with you instead of drunks and nutty guys telling me to be as water Grasshopper.


    #10     Feb 1, 2003