The Trading Lessons I Learned From Blowing Up My Account

Your resume means nothing– I won my first motorcycle race after only riding a bike for 3 months. The first time I tried out for football I made the team and was the starting QB. At 20 years of age I was the youngest broker ever hired at the firm I started working with and within 7 months I had broken all the company sales records! Success for me was not only expected but it seemed so easy. So when I started trading stocks I just assumed my bad ass personality would have no trouble learning this game. Oh how wrong I was ! After just 1 year of trading I had lost every dime I had ever saved in my 30 year life, even the paper-route money when I was 10 years old, it was that deep. Of course this was because I completely underestimated how demanding trading was but I quickly learned that your academic background, your bloodline or your past accolades guarantee you nothing when it comes to trading stocks. The market plays no favorites and has annihilated some of the most intelligent people in the world. Having a great education can certainly aid you in your trading pursuit but self entitlement and ego will bury you.

Only Baseball players hit home-runs– When I first started trading I was going for the grand slam on every trade. I actually thought it was stupid to take a small gains. I mean I was here to make bank right? My attitude at the time was so “all or nothing” that I didnt stand a chance. And of course the bigger I went the more I lost and the more I tried to make back that loss I would lose even more. I would painfully learn that your trading career is not defined by one huge trade but rather a thousand small ones. What happens when we go big on trades is we focus on the huge fluctuating profit and loss. This creates elevated anxiety levels that leads to us focusing on how much we are up or down rather than focusing on the trade itself and when our focus is on the money and not the trade you will definitely lose.

The Longest Road is the right road– By now after reading number one you probably guessed I thought I was the next overnight trading prodigy. In addition to that I know I spent the first 3 year of my trading career convinced that all the professional traders out there where part of a secret society and had a guaranteed formula and just refused to share it with me. I thought if you could just show me that one indicator or sell me that perfect software I would be rich! I wasted so much time searching for the holy grail that I forgot that the holy grail is actually your work ethic! There are absolutely no shortcuts in this business or any business for that matter. There is no such thing as a guaranteed system , a book, a DVD or a magic formula that will make you successful. Now most of these educational materials will help you. They will help decrease your learning curve and help you achieve your goals faster but they can not guarantee you success. You will still have to learn the strategies and then apply them in real time and you, like all those before you, will have to pay your dues

Knowledge is not as important a psychology- In the beginning of my trading career my attitude was awful. I took every loss personal. I would get so mad and throw theses tantrums and get all worked up then I would simply lose my focus and start revenge trading! Then after I finally educated myself and I knew what I was supposed to do I somehow would self sabotage every trade I took. Boy I was a mess! I would learn that you can spent countless hours reading, studying and backtesting but if you can not perform in real time on real money you are screwed. You have to have a strong mindset to succeed at anything. Your commitment to self belief and your ability to get back up after being knocked down will make the difference. An uneducated mentally strong person will always outperform an intelligent self doubter

There is a tomorrow– It is in our darkest hours that we find out who we truly are and what we are made of. One thing that always kept me going was the fact that the market is always open and always will be open. I knew that no matter how bad I screwed up that the next day the market would be open and I would get a chance to redeem myself. I would tell myself “dont worry if it takes you 3 years- 5 years or 10 years just stay in the game. Just find a way to stay alive because I felt once I made this work it would work forever and I would have this skill with me as long as I was alive and nobody could ever take that away from me. This past June I celebrated 9 years straight without having a losing month. I guess I was right to think that way.

Trading as with many endeavors in life is a journey. You will constantly evolve and change with the markets. There will ups and downs some good and some bad but if you take it in stride and allow yourself to focus on the long term rewards of trading rather than “instant gratification” your chances of enjoying a long and prosperous career will be more likely

Doug