Trading Pain: Dealing With Heavy Losses

Yesterday I took a massive loss at about 50% of bank, I'm writing this post to try and break down the process of what happened, why I did what I did and what steps I can put in place to prevent it happening again.

The rise

Over the weekend I was up a couple of hundred quid thanks to some great trading decisions and a little bit of luck, I'd lost a few but won most. The feeling was great, and perhaps my discipline wasn't there to reign me in. I've identified this as the point from which things took a turn for the worst.

The Euphoria

Because of the big gains that I had over the weekend, there was one thing I was really looking forward to doing. Taking the data and applying it to my KPI. I was perhaps too ecstatic. Too pleased. I should have kept it all in check and focused on the things I did wrong, of which there were some (I just got lucky). I was blinded by the winning trades and that really came back to haunt me later on. This is something I really need to work on, when the times are good... Don't let it get to your head.

The Invincibility

As a result of the Euphoria and the ridiculous profits being made over the weekend... And the fact that I didn't focus on the things I did wrong to try and refine them and keep them in check, I began to think that all my trades would win, as a result, my bank management went out the window. After all, if all the trades are going to win, why hold back on the stakes?

The Great Panic

Of course, I wasn't invincible and thus, having not kept myself in check my reckless trades bit me squarely on the bum. I then panicked and chased up the loss by doubling down on a bet that had failed to meet certain criteria for a trade (In other words if my head was screwed on I would not have placed the bet). Can you guess where this is headed?

The Loss

The trade lost (which it was likely to do based on criteria and the way the match was going) and a big old chunk of money went with it. At first there was a bit of a sick feeling in my stomach. I was a bit shocked it lost (thanks Euphoria and Invincibility). But then I came to the realisation that the proverbial wool had been pulled over my literal eyes. The results of the previous days excellent trading was were I initially went wrong. I'm not saying I'm too successful.... I'm saying I didn't apply any objective thinking to the results meaning I absorbed the results with emotion that resulted in the events described above.

The Conclusion

What can be done to prevent something like this happening again? Well, hopefully I'll be a bit more objective not just when trades lose but also when trades win. It's important to maintain a level of professionalism when trading football, because there's no room for emotion, it will cloud your judgement. It will make you hesitate when you should act and act when you should hesitate. Basically,  it will bite you on the arse. I was lucky that my whole bank wasn't wiped out by the events of today.... 


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