Think Like A Trader Blog

Thursday, 8 September 2016

How Low Can You Go?

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Well, the answer is pretty simple – very low.

What I’m talking about, is how low trading can drag you when things are at their very worst. So what I’m going to do for you in this post is something very few professional traders and educators do – I am going to outline how I was when at my worst. I can still remember the day, the feelings and the situation as though it were yesterday. By doing this, I hope it can help anyone else who is struggling to see that there is a way forward and at some point, all of us have struggled.

So I used to trade sitting at my desk, facing my bedroom wall. I was tucked in the corner. I had convinced myself that being in that position meant I had no distractions and so could focus on trading. I used to get up at 6am and switch between the Forex pair AUDUSD and the Dow Jones. Sometimes I’d be there until 11 at night.

This particular day started like any of the others. I was well on my way to learning how to trade. I had a lot of knowledge, was forming a good trading strategy, and all in all I thought I was ‘on the up.’ However emotional trading was still a huge issue, one that I conveniently brushed under the proverbial carpet. The reason I was able to do this is because, on most occasions, I managed to keep hammering at the charts during those bouts of emotional trading until I pulled my account back to breakeven or a slight profit for the day.

I liked to trade around the open of markets most of all – usually the Euro open and the London Exchange open. I still like trading at these times best today, but now I am much more refined and, have a grasp of my emotions and… know what I am doing.

So anyway, this morning I sat down with my coffee (essential component of any successful trader!) and watched the charts. I got into my first trade a little after 7am. It was a losing trade. I was pi##ed off, but for the time being, I held it together. At around 8am I entered my second trade… that was also a loser, one where I moved my stop to try and stop it from becoming a loser.

Warning bells begin to sound for all readers. You can tell it isn’t going to go well from here on in. But the problem was, for me at that computer; the warning bells were drowned out by my frustration and anger at losing two trades in a row, one of which violated my rules. And how does an emotional trader deal with those losses? In a logical way, stepping away, working out where I went wrong and figuring out how to correct it? Nope. The emotional trader continues to trade.

By 10am I had been in at least fifteen trades. Some were small wins, some were small losses, and others were larger losses. They no longer followed any sort of reason or rules. I was at the point of taking trades because –

‘I’m certain it’s going to go up here.’

‘It looks like it’s going to go up. That means it’s going to go down.’

‘My last trade lost as a long. So by now the market is due to shoot up. I’ll enter another long.’

These are all genuine things I thought (they’re in my trading diary) and believed at the time.

Fast forward to around 8pm. I hadn’t moved from my desk. Not to go to the toilet. Not to get a drink of water. Nothing. I had lost count of the number of trades I had entered – probably up towards a hundred at least. And had it worked? Had I made it all back and saved the day as had happened on so many other days?


I was down. And I was down big. Thousands of pounds wiped out. My account was decimated. My head was a fractured mess of exhaustion, anger, sorrow, self-hatred… you name it.

So that’s the story. I was essentially broken after that day. The lowest I have ever been through trading. I truly believed that there was no way for me to become a trader. I thought I was useless and would never amount to anything… all that good stuff that creeps in to kick you when you’re already down.

So first thing is – it happens to us ALL. There is no professional trader who has been doing this for any length of time (so that they can consider it a career) that has not felt as low as that and made idiotic mistakes like that. It happens. It is part of the learning process. We are emotional beings attempting to shape ourselves into a career that demands an emotionless approach. It is monumentally difficult.

But you can get through that stage. The important part is that you learn and you grow. Correct your mistakes. I did not blame my broker or a book I read or a course I took. I knew the problem was with me. But more than that, because I knew the issue was with me, I knew that I could correct it. I HAD to correct it. Because for me the alternative really was pretty terrifying. The alternative was to admit that I couldn’t sit at a computer and follow a set of rules. If I couldn’t do that, then what control did I have over my life? If I wanted to do one thing but was repeatedly doing the opposite, then who was pulling the levers in my head?

I don’t want to start getting all wishy washy and diving into Metaphysics, but that was one of my key motivations. Yours can be anything you want it to be. Just find the reason for continuing and at the same time work your ass off in order to find ways to improve. They can be in any area that is needed –
-       How do I begin to control my emotions?
-       How do I find or develop a professional trading plan?
-       Where am I lacking knowledge and how do I find that knowledge?
-       What are my goals and what steps do I need to take to achieve them?

It wont be easy. Nothing in life is every easy. But hopefully by showing you just how low I have been in the past, you can see that it happens to us all and take encouragement from the fact that if I can climb my way out of it, so can you!

I hope you’ve all had a great trading week!

James Orr

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