Trading Journey: My Worst Trading Day

This blog post is part of a trading journey series. For previous chapters, follow the links below:

• Chapter I. – Trading Journey: Not Your Typical Beginning
• Chapter II. – Trading Journey: Discovering The Trading Edge
• Chapter III. – Trading Journey: Coming Home
• Chapter IV. – Trading Journey: Back On The Trading Floor

Chapter V. – My Worst Trading Day

As the trading clues got more integrated, I started to feel a slight change in my trading consistency. This subtle change that took 12 months of deliberate practice, weekend drills and endless debriefs to build, suddenly started to bring fruits of my labor. Axia Futures co-founder Alex Haywood always reminds us how long this journey to consistently profitable trading is. How long it takes to integrate all the nuances of consistently profitable trading and under which regime and deliberate practices the achievement is possible. None of us want to listen at the beginning, we all want to jump in the arena of trading live and become the outlier, the 1 in 10 000 who can make money from month two. Most of us never become the outlier but ego is bigger than our realistic expectations. Maybe for a good reason. Maybe, if we would know how hard it is at the beginning, we would never start. As Steve Jobs once put it:

Most of the traders who try to become professionals fail and leave the business for good. We blame all kinds of things, from internal drivers such as our belief system to external drivers like “shitty choppy” markets or HFT manipulation. I have been through a lot so far on this journey (from seeing 8 figures trades on day one of my trading career to dealing with unbearable physical pain)  and now I finally started to see some longer-term consistency build up. My biggest trait though still was my good days/bad days ratio. The ratio in which on bad or very bad days, I lost much more than on my good days. I was able to have long strikes of positive consistency until one day, the big loss came and erased a larger portion of my profits. Well, things were about to get even more dramatic than I thought in the days ahead. A dramatic loss that made me question if this is THE time to quit for good.

The day started slowly. It was Thursday. During the week I have felt I have underperformed a bit in my trading but it was not bugging me much. I did not feel any strong pressure from the week. Just a subtle irritation. I just felt that the week was somehow slow and there were a couple of mismanaged opportunities. As the afternoon was approaching, I have built an idea for nice reversal trade in Gold, going long. Everything was set up nicely. I started to really like the trade idea. First common mistake: You feel you have spent so much energy preparing for this trade so it simply must work. It is time to get paid. The market started the anticipated move in the US cash session in the direction of a reversal zone. Dot by dot I started to connect my clues for access into the trade and started to build the size. Then, suddenly, I got stopped out! That little fast stop triggered a little rage. Still, I felt I am aware of what is happening and calmed myself down. I thought I was in control again. But then the market again started to exhibit all the attributes of the successful reversal. It showed me it is time to load up again. I started to build my position, got nicely onside, and I was already counting money. Now I am gonna get paid. Mistake number two and three: not only the trade you have married started to work, not only it showed all the attributes for a reversal but now it started to pay off. Then, suddenly new flows came into the market and Gold started to press down yet again! This time, I would not let this happen. “This is yet another fake reversal“, I told myself. I am gonna hold. I have invested already so much energy, time and money into this play. Little I knew that the market just started one of the biggest drops in months. Under bigger rage, I started to TILT into my trade idea and I did the worst mistake number four: I started to average down. Suddenly I have compounded a position of 10lots in Gold on a day of the biggest drop in months. The loss happened so fast, that even the risk manager that usually gets us out of massive trouble could not react. Everything happened super fast. The damage was massive. I was devastated.

Looking back, the scariest thing about the damage was, that from a certain moment, I was not present. Only my neanderthal mind clicking the mouse, not willing to accept a devastating loss was present. A recipe for disaster. Once the dust settled, I was out of all my positions, I was staring into my screen thinking, this is it. I can’t do it. How can I ever become a consistently profitable trader when I let things like this happen. I was fearful, in disbelief, and in rage with myself. I wanted to quit. After all positions have been closed, I felt a physical disgust with myself. I was so down, that I hated to do the debrief on a trade that I would rather immediately forget. I wanted to distance myself from the pain, not put it under the microscope. I wanted to quickly forget, go home, and cry.

Later that day, Axia trading coach reached to me and we had a very lengthy conversation about what has happened. We discussed all the nuances that led to this biggest red day of mine and how it was probably a matter of time for this trade to happen. I had to go back to the drawing board. I must learn from this! I came back to my trading desk and I have questioned everything, from the type of trade, a risk I took, planning, triggers, and clues throughout the week leading into the trade. Every little detail that got me into the devastating TILT MODE. I have reviewed in depth the source code that led to this massive loss. I have beaten the crap out of this trade in the debrief and went into the smallest details of what that source code leading to this loss was. After an hour of thinking and debriefing, I have located invisible issues that triggered me. Something that was hidden from me deep down and I completely ignored. I took few days off to fully reflect on what I have found and I have decided to install new practices that would hopefully forever remove this “trigger” of poor trading behavior. Looking at this negative experience, I would never tell how significantly my approach to trading has changed from that moment on and how it could lead to the most profitable months ahead. But more on that later.  

Thanks for reading.

Trade well.

JK