My Worst Ever Trading Day

It's a rather interesting experience to share about myself: At my worst.

2008 had been a great year of trading. Still a newbie, I had limited myself to 1 or 2 contract live trading. Before this day, I had doubled my little account. Doubled it. I was doing great, despite noticing a troubling pattern: periodic "blow up days" where a couple of innocent stops would turn into 5 or 6 stops. And my loss limits would be tripled. My loss limits at the time were $400 and the worst daily losses were about $1,200: A 3 to 1 blow up day would happen 2-4 times every couple of months.

But I took it to a whole new level on this day. A true climatic experience. I can still remember the haze while hitting the buy button over and over. Truly, when intense frustration takes over, combined with a DESPERATE NEED to gain psychological distance from losses, trading is a venue where it's quite easy to engage in highly destructive behaviors -- and literally not even realize ANY consequences until the damage has been done.

It took me over two years, probably longer, to get over this extreme $2700 loss day. The damage to my self efficacy was so devastating. It was not the money. The money was relatively small. It was the fact that I was out of total control. Until I got myself to a point where I could be very certain that I'd not do this again, there was no way to size up my trading. The numbers get serious with 5 or 10 contracts.

If I had upped my size substantially before this climatic loss day, after such a good winning streak, I'd have most likely blown my entire account out.

To this day, everyday, my primary brief therapy goal is to maintain loss limits. Still, even 3 years later I've struggled with breaching limits in 2011, although very mildly so. Each day I turn on the screens, there is fear of what's possible. The fear of getting lost in a haze and doing wild, uncontrollable trading.

Like Dr. Brett always has preached: One of the the WORST things that you can ever do to yourself is to experience out-sized losses or gains. The trauma on the mind can, and probably will, set you back for years.