How to Recover from a Bad Day
Just recently, I met with a trader and I meet with them all the time and it's happened to me a bunch of times. We are talking about getting back from a really bad day, recovering from a really bad day in the marketplace, where I have this customer who makes $1,000-1,500 a day, 5, 6,7 ,8 ,9 days in a row.
That guy is a great trader and then he trades in the after hours one night and he loses $9,000. The next day he is not the same trader that he was for day 1, 2, 3, 4, 5, 6, 7, he is the trader from last night trying to make back that nine grand. That's not the way it works. He has to work for nine days to get that back. You made the mistake; you traded the stock that you had know idea about. You bought a stock that was down $12 and you bought a thousand and then it was down $13, you bought another thousand, then it was down $20 and you realized you were completely wrong. You sell it and you lose nine grand.
It happens, it happens to all of us. Go back to basics, go back to a hundred shares. Even a $100 profit the next day is a winning day. If you start shooting for the fences and you start swinging for the fences immediately, trying to make that nine grand, I guarantee you're going to lose another nine grand. The next thing, you will be out of business, and this is a great trader. He's lost complete perception of what he used to do. He was a tip trader, he was grinding; he was a grinder. He hit singles.
I am huge Met fan. Jose Reyes is not a home run hitter. He is our lead-off hitter. We want to get to first base. He gets to first base by hitting the singles. Then he steals second and then eventually David Wright comes into play, Carlos Beltran, and he brings him home. So, realize that everyone is going to have bad days; everyone is going to make mistakes, we are human. But learn from them, go back to basics, go back to what you know. Don't increase your trading size, don't go to 5,000 shares, if you are a thousand share trader, go to 500. Decrease, play smaller, really, really think defensively: the best offense in trading is thinking defensively.
My guys who really, really worry about how much can they lose on this trade instead of how much are they going to make, those are the guys who made $300,000-400,000 a year consistently. These are the guys who have been with me since 1997 and coming everyday and they have their game plan and they are not looking at what's above and where they can sell it, hypothetically. They know were their support level is and where they are going to get out.
It takes a very honest person to realize that they messed up and what it took to start over. You don't just start running marathons, you got to walk first, and you got to crawl before you walk and you got to walk before you run. I think that that's very, very, very important; self-honesty, self-reflection is huge in this business.
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