I broke a rule today I haven’t broken in 2 years. I took 4 TIMES my daily loss limit. When I told my wife about it she simply said, ‘Why did you break your rules? You teach a day trading course. You’re a professinal Day Trader’.
Wow! It sounds so simple when you put it that way. And to be honest, it really is that simple. The ONLY THING that separates me from the 90% of traders that don’t make it in this profession is DISCIPLINE. That’s it! Discipline is the only thing that keeps me in the 10% of traders that successfully trade for a living.
So when she asked me ‘Why did you break your rules’, my answer was this. ‘I’m human’. She said that wasn’t a good answer. I said well it’s my only answer. And it’s true.
It doesn’t matter that I teach a trading course. It doesn’t matter that I haven’t had a red week since July. It doesn’t matter that I’ve only had 4 red days since Halloween (today is February 7th). Today, I was human. I made that split second decision that can start a trading death spiral. I basically said ‘F it’! I’m gonna average down. It only took about 1 second to make that decision. Once it was made, I was doomed. I bought more as a trade went against me. It kept going down. I bought more. I had no choice now. It was either buy more, or take a nasty loss. Well, after a couple more ‘snowball trades’, I had no choice but to stop the bleeding. I hit out of the trade with a loss that is 4 TIMES my daily loss limit.
I have no excuse. I’ve been trading well. My equity curve is beautiful. Well, it was. It’s not now. I’m a good trader. I teach people how to trade. I’m super disciplined. Today, for a split second, I lost my discipline. I now have no choice but to embrace the pain and use it going forward to turn that equity curve right back around. After all, that is the blueprint of a pro. A rising equity curve with no big drawdowns. That can only happen with UNRELENTING DISCIPLINE. I have that (today notwithstanding). It’s what I’m most proud of. It’s is the one thing that separates me from all those traders that couldn’t stay in the game. Plus, there is one great thing about today. Big losses can be a trader’s best friend as I explain here.
So, what the ‘F’ happened today???