How I Made The Worst Trade of My Life

It happens to everyone at some point.

I wrote this post a while ago and just came across it today. I had it stored as a draft. I think I should have published it way back when I first wrote it. But I held off. I don’t know why.

Here’s the thing about the worst trade or investment of your life: it did not happen because you bought at the wrong time or because you sold at the wrong time. There’s usually some other part to it. It’s usually about what you did after the trade or investment happened.

So why did I make my worst trade ever? Revenge.

Let me explain.

Pretend you made a bad trade. A really stupid trade. And when you look back at the trade you are straight up bewildered as to why you did it. Suddenly your account is down on the day. That was not smart of you. Come on, you know better.

“Okay” you think, “I’ll never do that again.” But now you’re getting angry and it’s building the more you think about it. You want revenge. You want redemption.

You lean forward, inching closer to your screen. You look at how markets are moving. Then, at that moment, the thought hits you, “I’m going to do one more trade and make it all back. I’ll do this once, get back what I lost and never do it again.”

It rarely ever works out like that.

Your mind is rattled and not thinking clearly. Never invest or trade with a rattled mind. This is when revenge trading starts, and when it starts, it spirals out of control. Suddenly, the following steps are you:

1. Bad trade
2. You try to make it back
3. Another bad trade
4. Now you try to make it all back
5. An even worse trade
6. One more
7. Now it’s the worst trade of your life

There’s no telling how long that cycle goes on for some people, but just like that your day took a beating and so did your account.

The thing about losing money while investing or trading is that it needs to be quick and forgotten about immediately. When you take a loss, you should never trade thinking you have to make it back. Forgot about it and move on. There are several thousand stocks in the market and even more if you count cryptocurrencies, and derivatives. The potential is endless and it’s not going anywhere. It’s also really hard to make back losses and it gets worse the more you lose.

This is a table I always look at now:

I am not the first to experience revenge trading and I also am not the last. But I am happy I could write and finally publish this post today. Maybe it will help a reader down the road. If you have any wild stories about your worst trades, feel free to send them in the comments below.

Make sure you’re also following me on Twitter and my blog scheplick.com. You also might like this post:

What Warren Buffett Says About Gloom, Doom, and Fear in Stocks