So after all those charts I want to describe to you the thoughts in my head during all of this. For one, I have done a pretty good job reminding myself that even though this is not real money, that I should treat it as such so it might as well be. In that regard I failed miserably to cut that last loss quickly. I was also trading too large to begin with. And to say something that is easily seen as a means to rationalize this behavior away, I've been depressed the last few days. I have to say though, as tempting as it is to fall back on that, it's no excuse and professionals do not trade like this. Well... from time to time even the professional, seasoned veterans slip up like this, but it is still no excuse for me to do it.
There was a clear moment that I recall telling myself, "You should not be trying to go long this, just get out and reverse! Set up the robot, lower your size and calm down so you can either lose very small or win small."
As convincing as that downward wedge was, it was a violation of my own rules to hold a loser of that size for that long. The initial peak drawdown was slightly over 10%... And every time it came back down to that bottom and became only a 2.5% loss I kept feeling like it was inevitably going to break down and score me a profit.
The thing is, at that point, even it it tore past my profit target I knew I would have to report this shit behavior as a bad trade. I put my self at risk, I put my account at risk and that is something idiots do.
As time crept along like a snail it was really bothering me. I kept telling myself I knew I should just take the loss and get it over with, but I was stubborn. That stubbornness cost much more than I wanted to see. It made the $250 loss seem like an incredible bargain.. and the key point to ponder and drill into my skull, is that it was a bargain.
It's important to view every small loss as a bargain, not a wasted opportunity. Yes, there is such a thing as death by a thousand cuts where you are just taking loss after meaningless loss, but the key is to stop taking meaningless losses also,which ultimately gets back to another guideline I have not been following: Only trade the news and when the market is rocketing in a direction with momentum.
Because I am still not home everyday, it causes me to only be able to trade the market live on whatever day I happen to be home, which is almost never the really volatile days. One thing I do need to set forth now and make clear, is that besides my main goal of only trading the 2 or 3 largest events each month, there is price actions and chart setups that are worthy of trading.
The main issue with what happened here, is that because of the size I was trading I looked at the dollar amounts and was really reluctant to take the loss... Even though the reality is, that trading at $40 a pip, a $200 loss is only 5 measly pips.... I could totally get that back, but $200 seemed like a lot of work to get back because I was focused on the dollar amount, not the actual increment of market movement.
Had I actually been trading at the usual $1 per pip, I would have let that loser go very easily. The larger you trade, the more accurate you must be with your entries and exits. The quicker you must cut your losses, because if the market moves violently against you it is eating up your account far far quicker. In my case 40 times quicker than usual. The 36% loss I took would have been less than 1%... how crazy is that.
So, as the day went on I felt pretty damn stupid. Stupid because I did not do what I knew I should have done, but at the same time I was confident I would not have traded that large to begin with if it were real money let alone hold a loser like that. A large part of that stupid feeling I had, was knowing I had to report it here on this blog, even knowing that part of the reason I let it happen was out of this pure video game "nothings really at stake" mentality. It's honestly the first time since I've started this that I have let myself feel that way about any of this. The other crap results in the previous months were testing. This wasn't testing, it was not giving a fuck and walking away because I didn't want to take a loser and have to build that money back up again... (even though if I wanted to I could just click a few buttons and add it all back anyhow)
But the next day, after I had taken the loser and felt even stupider... I looked at the chart again and sure enough the market had made all the losses up and then surpassed the drawdown by a significant amount. For some reason, I smiled and the stupid feeling had left me. I felt renewed and somehow optimistic, but not because I was somehow proven right. In all honesty, I wasn't proven right... Being right is going short because you think the market is going to drop right then, and it drops right then. I was dead wrong, so why was I happy?
In totality I don't know. And in time with enough thought I will hopefully come to know. But I think part of it had to do with going through that trial and stress, and actually feeling like lessons were reinforced in a way I benefited from immensely. I think it is from admitting to myself and to you, that I fucked up. No secret shame to hide, just transparency. I think part of it is also from the gut that told me not to be trying to do the things I did after the market proved to me immediately that I was wrong. my gut was right, but I was stubborn and greedy.
So, I honestly look forward to the next time I trade, whether it be at the appropriate time or not. I want to do it right, whether I profit or not. This doesn't have to be the end of my confidence, especially because it was outside my rules to begin with and that is what I should expect to happen. that is the purpose behind the rules to begin with.
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