A small problem turning into a big trading disaster!
Today I made a crucial mistake at the New York market open! I waited too long even tough I had every signal in the book to go long, I hesitated and I missed out BIG!
Here's the thing, when you make a couple of mistakes in a row this can lead to a complete disaster in trading, I saw flashing lights in my head telling me to keep calm and stay focused, but for a brief period of time I almost went into a ditch and gave up a major profit which I made yesterday.
The biggest problem with making mistakes in trading is that they have further consequences, for example I found myself overtrading, but the root of the problem I just found and decided to write up this little blog post. The root of my problem was REVENGE TRADING!
Revenge trading is a byproduct of frustration, typically happening after missing out, or losing on a trade, for me it was both of these (missed out, then took a few losses).
After a few losses it is very easy to start to rationalize that "the next trade is the one that you will be right on", now you also bring greed to the mix, and before you know it.... boom your in a BIG DISASTER!!!
You start being over aggressive in plays in which your risk/reward is not as favorable. You tend to add to your position aggressively on any sign of confirmation to your trade. In the end, the risk does not justify the reward as you either get out too early for little profit, scratch the play, or take a massive loss. - Either way, you lose all of your structure!
In our ongoing effort to keep what we do real, I was down BIG, 15,994.52 to be exact (see below)
Thankfully this was profit from the month and I had more than enough to work my way back up, which is what I did but the reason I wanted to share this today is because day trading isn't at all easy, even after doing it for the majority of my adult life I am still prone to mistakes and blow-ups! This is why keeping focused, working your charts (for trading and practice) and overall stay mentally sharp is vital.
Experience helped me today, I went from just under 16,000 in minus to an overall loss of just about 500 (see below), shi* happens, but if you let it continue, you'll be in above your head and might even burn down your whole account, trust it its happened to me enough times to learn from it and now when I see signs of mistakes, I take a chill pill, think what I did wrong and get back on the horse with a fresh mindset.
One of the main things I did today to re-coup myself was I didn't think about the money at all, I was ok with a 20,000 loss, I accepted the fact that I could give back a solid chunk of the profits I made this month, but I also was determined and focus to wait for the right setups and trade them with a primed mindset, which is what I did so now I have the energy to write up this blog!
Here's a screen-shot of US30 (Dow Jones), just for you to understand the mess I was in,
Blue = winners / Pink = losers
This is a 5min chart, I was trading the 50tick chart, a much more zoomed in chart, I was trading valid signals, but I didn't spend a minute to understand that we are stuck in a range!
Anyway, we spoke openly about my problem which I turned into a challenge and gained massive experience from.
At the end of the day... sometimes a small 5/10min break away from trading really helps me clear my mind, especially when I have have a series of losers/mistakes.
At the end of the day, it is not what you do right away that gets you out of a loss, it is first and foremost important that you stop trading, gather your thoughts and get ready to make ONE good trade, and then one more good trade, but one trade at a time.
I know I'm walking away from the markets today with experience no one could teach me, it is something I had to learn on my own and I am so glad I did so close to the end of a year!
Leave a comment below on an experienced that shaped you into a better trader, or even something that destroyed you but you can use it today to make you a better day trader!
Anyhow, I hope this video helps you to improve as a trader!
All the best traders!