6.10%

by theknownothinginvestor

After I wondered if my strategy was the right approach to win in the markets, I held on to my backtesting and first months of trading. Certainly, I would in a frame of time go positive again, I just thought that I need to have more strength in my convictions and be more sharpened focus in my trading. What did this really mean? Going crazy and forget all about I had learnt. I started risking more capital per trade, about 3%, and during the trade I would change my stops influenced by market micro-swings. I was opening positions because I want a certain price action not because I had identified that price action. Believe in what you see not in what you want to see.

I started to feel anxious and having bad night’s sleep. I was going fast in stupidity lane. What happened to me? I was so good with paper trade account. The problem was real money. I had started to put money where my mouth was. That pressure was immense and I could handle it. All that wishful thinking, about making tons of money and quit my job, were being torn apart. I was having a reality shock. I was learning that trade is really difficult and learning it the hard way, with losses. With that kind of scares you read about ten thousand times, but we quite don’t understand it because we never feel it. Probably this kind of pain is necessary to avoid future mistakes and at some point grand majority of traders have or will experiment this.

When we trade with our real money, some of our worst human feelings start popping out, greed, euphoria, panic, despair, self pity. These feelings cocktail  are so powerful that if you don’t have mastered your mind you’ll make real bad decision. You will act by impulse like if you are under attack and your rationality will be underpinned by your survival mode. The market is fighting me or market is controlled by big corporations to doomed the little guy were excuses that I used when I was losing.

But markets don’t care about your feelings. You’re not especial. You’re simple one more going with the crowd. If you lose it’s your responsibility.

I was immersed in overthink when I was saved by my hard limit. I was rational enough to hold on to my first and most important rule.

In ten months I had lost 10% of my total capital. It was time to stop…

 

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