24/2 – Experiencing and working through a “Trader Meltdown”

The concept of a “trader meltdown” has been mentioned a few times on my blog.  Thankfully not overly often – that’s because meltdowns tend to occur rarely, and so they should.

I’d like to share some of the thoughts that go through my head when I experience a meltdown.  I don’t know whether my experience is indicative of the typical experience that a trader might have when going through a rough patch.

The most recent meltdown was triggered by a run of 11 consecutive losing trades over 3 trading sessions.  The details of that (as well as potential explanations) were shared here.

How did this make me feel and what did it make me think?

At the end of Day 1 (6 losses) I was feeling angry and frustrated.  Shortly into Day 2 (2 more losses), I had an emotional outburst, and abruptly ended the trading session at 8.15am.  I felt frustrated. By lunchtime on Day 3, I felt hopeless and confused, and I stopped working altogether.  By Friday my trading confidence had taken a major dive and I felt as if I had no idea how to trade.  My “trading core” was rather shaken.  It resulted in me feeling very depressed and useless.  This was  made worse by me trying to deal with my girl-friend having broken up with me a few weeks earlier.  I had really cared about her, and this also put me in a confused state.

It triggered a lot of questions for me – some valid, some just doubt-creators:

  • In terms of the week – Did I complete misunderstand and/or misread the market in Week#7?  Did the £250 R value already hit the “glass ceiling” for me, such that it made me uncomfortable?  Were my refined trade management tactics too rigid and/or did I apply them too blindly, without paying attention to what the market was telling me?  Was the terrible result due to market conditions, or to my personal psychological conditions – or a mixture of both?
  • In terms of my trading strategy – Is my approach not working?  Can the strategy really be good if I manage to wipe out six weeks’ worth of profit in a week?  Is there still stuff I am missing?  Am I simply not making enough profits in the normal weeks?
  • In terms of my overall progression as a trader – do I still need to trade whole let better/more competently than I currently am?   Am I progressing too slowly with my trading career?  Am I still barking up the wrong tree somehow?  Do I genuinely believe that it’s possible to consistently extract money from the financial markets? If I do, do I believe that I can do it, that I can consistently extract money from the financial markets?
  • In terms of my emotions/reaction – Did I over-react? Am I throwing out the baby with the bathwater?

Answering to myself   

I have to remember that overall my trading confidence has been improving and definitely getting better.  This has been paralleled with steadily profitable results.  A lot of this increased trading confidence can be traced back to the pub meeting in early December (2015) and the subsequent insights.  It’s just in Week#7 that it took a dive!

Additionally, I have been trading well.  I am heading in the right direction.  It’s really important that I continue to rely on myself, and that my confidence stays high.  I have a couple of friends, whose natural charisma and confidence I always admire – interestingly, they are both in the alcohol distribution business – running Liquid Ignition and the South African Wine Company.  Let’s plan to be more like them at the start of each working day.

I will have to continue refining, reviewing and adjusting.  It’s not easy work, but I can get there.  There is a lot of money to be made in the financial markets.  I will have to continue working hard, not give up, and be creative and smart about it.

What did I do at the end of the week?

This trading fiasco, together with continued turmoil in my personal life, helped me to decide to quickly fly down to southern Germany and spend a week with my sister, her husband, and their two teenage kids – to get into an atmosphere of good feeling, fun and reality.  I have the luxury of being able to do that because I am properly funded to trade full-time and because I don’t have any dependents – I realise that other full-time traders may not have an option like that.

Thus by Saturday evening, I was in Bavaria and around people who cared for me – allowing me to slowly think about the week and try to piece myself together again.

My goal for the future is that I will grow more resilient and that I will less impacted by losing streaks.  I guess this is part and parcel of becoming a successful trader.



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3 Responses to 24/2 – Experiencing and working through a “Trader Meltdown”

  1. tim says:

    Hi there, very interesting read!
    In terms of your terrible day(s) of trading, can you pinpoint how you feel once you are in the trade? As in, do you feel comfortable when you are in them at the start, even if it shows an early initial loss? Because if you feel comfortable with both your ‘edge’ and your execution of it then this performance is most likely just a blip. It’s a weird feeling when a trade loses but you feel confident because you know that it was a ‘good’ trade, and your statistical edge just didn’t manage to play out this time.

    However, you have been trading a while, and if you are feeling uncomfortable in the trade quite quickly then it might be an execution issue (i.e. was it REALLY part of your strategy/set up to enter), or that you don’t feel confident about the edge itself.


  2. Hello Tim. Thanks so much for your detailed comments – very appreciated. I very much agree with your point of view.
    In answering your question, I think it essentially boils down to me not (yet) having enough confidence in the strategy itself, rather than it being an execution issue.
    Have you traded for a while yourself? Do you have one or more strategies in whose edge you are confident? If so, how did you go about building that confidence? Would be great if you would be happy to share more details.


  3. Pingback: 4/9: Trading Update | Trick or Trade

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