Friday, December 22, 2006


Ok. I need to get this off my chest so that I can move on.

Yesterday, I traded ER2. And not just small trades, I made big bets, bigger than I could afford to risk. I wound up losing quite a bit of money (for me anyways, that's a lot). A one point loss on one ER2H7 contract means nothing, but a one point loss on 6 contracts means scalding pain. This was sickening because I should have known better to control my risk.
Yesterday, I didn't want to post because I just didn't know how to explain it to this journal. It's embarrassing to keep having to say I feel embarrassed at making another embarrassing mistake like this. It took me most of this month of building up those profits, and the majority of it was all erased in two days. I wanted to go throw some rocks, and then hide under a rock.
To make matters worse, I feel like I have disappointed the gift giver. The worse part is that I can't even say I'll promise never to indulge in this sort of stupidness again, because I understand myself enough to know that I currently do not have the capacity to make this kind of an unrealistic promise. And I hate saying, "sorry, I'll try harder next time". Sorry? What does being sorry get you? Saying sorry will not help to recover the lost profits. And try? What do you mean "try"? Try is like doing something without the committment. It's like writing cheques when the bank account is in overdaft. Do it, or do not do it. There is no try.

So, all I can do is get this off my chest so that I will feel less bad about myself, which will enable me to move on. The funny thing is that, after I went through the "hiding under a rock" phase, I woke up today feeling motivated - it's as if my determination and resolve has been magically restored. I don't know how to explain that either - maybe it was from cooking watercress soup (recipe is a little bit similar to this, but mine was more traditional), maybe it was from playing with my daughter, maybe it was from thinking about income producing assets, or trying to convince traderZBS not to give up his trading career (now there's a guy who could use some encouragement). Who knows.

Nonetheless, to mitigate the damaging effects of the stupid side of me, my plan is as follows:

a) smaller position sizes until I am back in the habit of managing my risk. I find that I think and act better with smaller position sizes - there's no "trade the profit" playing in my head, because the profit (or the loss) will be peanuts. I hate to say the H-word, but hopefully in the future, I will learn to use bigger position sizes more carefully.
b) trade less often - do more "virtual" trading while I wait for the real juicy setups to come to me.
c) talk to myself more - sounds corny, but every time I stop reciting my trading rules to myself, I start doing stupid things......
d) don't take the trade unless I am certain that I am willing to sell for a small loss.

Anyways, I'm aware that I have been overly obsessed with trading futures this past couple of days. I think I need to do this in order to get it out of my system. I actually feel better today, more controlled, and mentally focused. Once the market volume re-appears in Jan/07, I will get back into the regular routine of trading stocks and options.


john said...

we have to remember that losing money and breaking rules is all part of the process...i don't have any data to back this up, but my gut feeling tells me that introspective people (such as yourself) are way ahead of the game...i don't know if you dissapointed the gift giver or not, but i would imagine posts like these are why they give gifts in the 1st place

Phileo said...

Hi John,

Thanks for the encouragement. Your comment about me being ahead of the game might make sense, but I don't ***feel*** that truth yet.

Cal said..., sign up for the best virtual trading platform I've ever seen, called Global Straegy Trader. It's free, real-time, extremely functional, fast executions. My best learning tool to date, well besides losing money, but that's changed for the better now. Email a broker, they'll send you a demo password and user.

Phileo said...

Hi Cal,

Thanks for the link, I will check it out.
Thanks also for dropping by !