Buddy Roemer: Me, O...
Dan,
what was your worst month and/or year, and how did you bounce back from it?
what adjustments mentally and strategically did you make?
thanks in advance. always fun to chat with a pro
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Can't recall exactly where the worst month/year was...but I do recall the
process used to bounce back -- which was by trial and error.
First, when you really take a nasty loss (or bunch of losses), you're shaken
pretty badly. Lots of self-doubt, chastisement, self-flagellation, anger,
depression, etc. Nothing really good comes from it.
My first tactic was to "trade harder". That didn't work. Trading is
hard. Period. You cannot "try harder" and get better results. You
have to "try different". Figure out what you did wrong...and then
don't do it.
Second, I ultimately withdrew from trading for a period of a couple of
weeks...maybe a month. I'm an attorney, physical therapist, land developer,
etc...I can always find something to do other than trading. And I think having
other options gives you an edge. You don't HAVE to trade. Therefore, you can
keep a better perspective than the guy with $20,000 who honestly, sincerely (and
wrongly) believes that doing it full time via buying call options on high-fliers
will enable him to make a living. Good luck! Gotta have capital to trade
right. And that means that the best trade is often to take a second job and
bank the money.
So when I was away from trading, I still watched the market. Every day.
Thought about it constantly (that's what traders do). And I also came to
understand the things I was doing wrong. I was trading too big when I "had
a sure thing." I was refusing to be wrong because I did not want to take a
loss (because it would have been too big). I was revenge trading, where I'd go
after a stock that had taken my money (which is one of the dumbest ass things
you can do. As if EMLX really knows who you are? Stocks don't lose money.
People do.) I was managing risk solely through position size rather than buying
levels....etc.
So I came to understand that. And having gained that understanding, I then
started to wade back into the market very, very lightly. Focusing on trading
well rather than trading to make my money back. Trying to "make your money
back" is dumb. It is a common tactic, but rarely used with success. Every
day, your account is marked to market (unlike the banks, I guess). So you have
what you have. Focusing on yesterday's balance is a waste of time unless you
have a time machine.
So I started trading slowly, developed some better habits, and then just kept
learning.
Always learn. The best traders are intellectually curious. They always want to
learn, and most never feel that they know enough. Some do. But they are
fooling themselves.
So just gradually focus on doing the right things and you can "come
back" from anything...simply because you are not "coming back".
You are moving ahead.
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