After my string of losses that culminated with that 7K loss, I forced myself to step back and take a break. That was the smartest thing I could have done.
After my string of losses the last two weeks of August, I was in a really bad place mentally. I was feeling quite upset with myself for my lack of discipline that caused the losses. I was even questioning if I had any business trading anymore at all. I was losing faith in myself. If I was just going to fall back into my bad habits of stubbornness I had no business trading. I can’t keep giving back all my gains on one stupid stubborn trade. I will never make it as a trader if I let stubbornness on taking losses make me give back months of work.
Last year there were 8 trades that accounted for 3/4 of all my losses for the year. This year there are 4 trades that account for more than 3/4 of my losses, and one of those trades whipped out 3.5 months of work! That is UNACCEPTABLE!
This is why I came to the conclusion that I either have to truly nip this stubbornness in the butt or I have to stop trading. I am not saying that because I felt sorry for myself. It’s the simple facts. The data does not lie. I have a serious problem being disciplined and cutting losses.
But why? Why all of a sudden, after months of great discipline did I revert to my old stubborn ways? The answer was staring me right in the face… money! I started to trade for money. Now, wait, we all trade for money, right!? If we don’t make money then why do this? Well, what I have come to learn is if money is your focus you’re going to lose! Let me explain. Money started to become my goal and my focus. I wanted to make more of it. I would wake up and say, “I’m going to make $2K today.” Or, “Imagine if I make 5K today!” Or, “I need to make 20K this month so I can leave my ‘night job.’ ” If I did not make at least $1K for the day I was not happy. My happiness was becoming tied to the gains. If I won, I was happy if I lost I was upset. I was even upset if I made $0. I became subconsciously obsessed with it. If became my focus. I would force trades to make the money I wanted. I would size in too big too soon to make the money I felt I needed to. I would get stubborn on cutting losses because that meant I would not hit my monetary goals. I have heard pro traders say many times not to place monetary goals, but I did not listen.
During my little break, I realized this problem. I realized I needed to re-focus on 2 main things if I wanted to make it in this game. Those are Discipline and better Risk Management. To help me with this endeavor I decided I needed help; a mentor and/or something to help me, especially with how to look differently at risk management. So I decided to join another trading group that I had been following for awhile–LiveStream Trading. From the research I had already done on them I knew they focused a lot on quality disciplined trading and risk management. They were not some bogus pump chat room. And the bonus, they trade the types of stocks I do! I felt that I could learn something from them so I joined. It has only been a week since I joined but let me tell you, what a great group. I have not been disappointed. To see his trades real time and see the risk management plans formulated live has been invaluable. I think I am going to be able to gain a lot from them that will really help propel me forward on my focus areas.
So moving forward… for the rest of the year my two main focus areas will be disciplined trading and improving my risk management on my trades. No more obsessing about the $. No more money goals. I have sized back down as well until I can trust myself again. I feel that if I focus on quality disciplined trades that have proper risk/reward than the money will come as a result. I will base my happiness not on how much I made, but on how well I traded and achieved my two goals.