Drawdown’s Against Profits And Confidence
(1 of 2)
Kirk and Jed,
I wish not to make this eloquent or excessive in verbiage. With this being said, let me continue.
This week was a difficult week. Trading was down as were my emotions and confidence. In times past, I would not let any given loss disrupt that which I was trying to obtain. However, a very good friend of mine asked me if I would manage about $18,000 for him on the foreign exchange. Reluctantly, I agreed to so do. (He had been trading a bit on his own, had used Launch Pad, the Norwood Stop, et cetera, but wasn’t accomplishing a lot in his own trading.) He let emotion get in the way. He had suffered a few severe losses while trying to get even with the market.
I began trading his $18,000 first thing Monday morning with excitement, anxiety, expectations, and goals. Monday’s trading went well, and we were able to grow the account to $21,500. Tuesday, likewise. However, on Wednesday I took shorted GBP at exactly the wrong place and it turned to go against me. Because of my desire to make sure this individual’s account remain positive and "impressive," I let it go against me about 70 pips. Not a huge loss, but not terribly small either.
It happened again. And a third time. I was worried about that which he would think and feel regarding my abilities to manage his funds and/or trade my own funds. He has seen my trading reports and knows that I have had great success in trading the forex. However, because of perfectionism, I wanted his account to remain perfect. So, I went against my rules of trading and placed another trade following three consecutive losses in hopes of "making up" that which I lost. Unfortunately (and fortunately) it happened again. Being frustrated, I entered a fifth trade which … again … went against me.
By this point in time, my own confidence was drained, my emotions were utterly wrecked, and I hadn’t the faintest idea what to do. Now, the account was still positive from the beginning capital of $18,000; however, I had grown it to $25,600 in 2.5 days. (The five consecutive drawdowns brought it to $22,600.) So, what did I do?….
Tags: forex trading plan, managing accounts, profits, Trade losss, trade rules, trading plan
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4 Responses to “Drawdown’s Against Profits And Confidence”
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Dear paniced
You describe clearly what you did wrong already….first you accepted to handle someone elses money, then with one loss (something that’s expected) you paniced and went into revenge mode combined with fear of looking bad…re-read your post the answer is there
Dear Gary,
I appreciate your insight, and by no means did I think this little “experience” was going to be published. These are things I do not expect when writing the owners of this blog.
However, the mistake was not managing other peoples’ funds. I have done it before, and would gladly do it again because I know I am a good enough trader to help them make much more than they would in mutual funds, municipal bonds, and anything else for that matter as of late.
The mistake was, indeed, that I wanted to help this individual get out of the rut they found themselves in and so . . . the emotions set in.
Furthermore, if read carefully, there were three losses before making the emotional decision to enter again a fourth and a fifth time (both producing losses as well).
Sincerely,
Panicked
Dear trader
I appologize for maybe sounding rude or unsympathetic….but it did seem as though you described you steps so well that you actually asnwered your own questions.
Though I had nothing to do with the publishing of your comments….I’m sorry they were published if not to be…..but it is helpfull for others to see what we all face as traders….and with your experience you probably have much to offer for those of us that have not had such succes as of yet.
Since blogs are public domain….you may want to email Jed or Kirk directly rather than posting it here….but dont feel violated as nobody knows who this is and I found it intersting to see what even seasoned traders go thru
So Thanks
Gary,
No offense was taken. My apologies if my written verbiage was taken as such. I was merely trying to explain that which I foolishly did . . . in allowing my emotions to take over despite knowing the consequences.
To some degree, I did answer my own questions. However, having the Norwoods as mentors, I frequently write them to tell them experiences, such as above. It is a way in which they can track where I (or all of us) need additional training.
Panicked