I could really use a cool one right about now…  I don’t think I’ll ever see any of that $195k ever again.  I’m done with stocks, probably forever, especially given the reckless way I play them.  I wonder how many others are out there that are in my shoes?  And have the same trading/gambling problem that I do.  Or I am possibly the worst trader ever…

Funny thing is, I don’t like Vegas or casinos because I dislike gambling…  I shop at Wal-Mart because I am frugal in every other area of my life.  But I am willing to flush away my entire savings in 10 days…

I published my trading journal notes publicly as the first step of my 12-step recovery program…  Seeing it here in the open is helping me to realize how ridiculous and reckless my trading is.  I would be laughing at all this if it weren’t true.  But unfortunately, this is completely true and there’s no happy ending where I make it all back…  I’m done.

Well, if this blog has made you feel better about your own trading losses (“At least I’m not down 97.5%!”) or if you were on the other side of these wonderful trades or if you were at least entertained by watching this fast-motion train wreck, feel free to buy me a beer!  For $5, I can buy a case of Milwaukee’s Best at Wal-Mart…

 

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22 thoughts on “

  1. Joe says:

    Hey TrainWreck !! suck it up get back on the horse. I took an account from $5,000 to $130,000 trading FX from 2010 to 2011 and round tripped it back to $5,000. All because of ECB fuckery. I took about a year off, and started again in December with the $5000 and now sitting at $20,000 trading options.

    consider it tuition.

  2. Pete says:

    This is a really sad story! I hope you do recover from it. At least you are acknowledging and facing your demons. It is also good that you have catalogued your errors and your thinking as you made those moves.

    This has prompted me to think about facing my own demons the way you have done, because in some ways I’m in a worse position than you in that I have lost more money! At the depth of my drawdown, I was down $550,000! My account peaked in Aug 2011 and for the next 2 years did nothing but go down!

    Even now, I’m still in a 35% drawdown and so need to make at least 55% to get back to where I was in 2011!
    My systems only deliver a 20% return (in normal markets), So, if I’m lucky and get 10%, I wont reach a new peak for at least another 5 years! Ouch!!!

    After all my dreadful losses, the one thing that I’m absolutely convinced about is that there is no step by step approach that guarantees success in trading. It is disappointing, difficult, emotionally draining and painful!
    But you have to feel that pain. It is the only way I know that ensures that you trade your plan smaller – ensuring you at least a tiny chance of survival!

  3. I found you via iBC. You aren’t the worst trader ever, you just have no risk management strategy whatsoever. Send me an email, I would like to help you.

  4. rtlguru says:

    hang in there man. Also saw your IBC post and found this place. Yes, there are many of us like you. I have the same thoughts – am i a trader or just a gambling addict.

    I made 100% last year trading like a fool (2 million bucks we’re talking here). And I am now down to half that after yesterday’s action. The same reckless trades that made me money last year is now killing me. You know, doubling down on calls on breakouts. The kind of trades that only addicts make.

    Sad thing is, I’ve been a full time “trader” since 2009 and I started trading in 1998. I rode the dot com bubble and decided to short the market in 1999. I lost everything (200K) one month before the nasdaq crashed. Did me no good. I took 4 years off and finally creeped back into the markets.

    The market gods have rewarded me with riches beyond my dreams, yet here I am feeling like the biggest idiot in the world with no future. Why? It’s the nagging thought that I am just a lucky guy at the casino and one day, if I don’t stop, I will be bankrupt like alot of famous “traders” out there.

    I go to therapy and my therapist thinks I need to go to 12 step. The problem with the stock market is, eventually, you will get seduced into dreaming big and making reckless trades. I suggest you not get back in until you learn to handle the gambling aspect of trading with hard rules of risk management. I’m on the verge of taking a long break and not returning until I can unlearn the bad trading habits this fed induced bubble market has created in my trading.

    Good luck.

    • Thanks rtlguru for sharing your experience. Crazy to think you made $2 million last year and gave back $1 million of that… I think I’m too much of a gambler to be a good investor. I always try to be conservative, but one little loss and I go chasing it relentlessly with a huge bet. If I lose, I bet even bigger… I think it’s funny how even “professional” full time traders seem to make a lot of mistakes and get it wrong often, but I think the difference is the risk management. I’m not sure I’m cut out for this anymore, but I don’t know how to make my money back otherwise… I’m worried about taking the little cash I have tucked away and trying to get it back…

  5. rxfrchng says:

    You say, “I don’t like Vegas or casinos because I dislike gambling” yet that’s exactly what you’re doing when you buy a stock right before earnings, gambling.

    • Yes, that’s the irony of it all, I can’t stand to lose $20 at the casino, so I don’t gamble at all. But somehow, when I’m in the world’s largest online casino, the stock market, I take huge reckless risks to chase my losses… It doesn’t feel like real money.

  6. anon says:

    I feel for you reading this, especially as I have come from a similar situation but infact much worse. I lost $1 million in four months of which all was borrowed through refinancing property (that wasn’t mine), numerous unsecured loans and borrowing from friends. I am now in severe debt, with zero savings and only on a $50k salary job. i have no hope in the world of ever paying this money back. Life doesn’t get any worse than this, I hate the financial markets with a passion. I do hope you overcome your losses.

    • Anon, so sorry to hear of your losses. Sounds like a horrible situation all around. Are you still in the market? I have the same “hate” of the financial markets, but I got lured into investing again, thinking I needed to prepare for the future. And my 0.5% savings account was doing nothing for me… I feel your pain and frustration. I don’t blame anyone but myself for making bad decisions. I don’t think I’ll ever make my money back ever again. I think the only way to overcome the losses is to walk away completely..

  7. stupdworld@aol.com says:

    DA FLY OWNZ JOO

  8. Gwen says:

    Hi…very touching post especially as I’ve been there. In fact, most traders have. There are many statistics on how most traders blow up at their first attempt. I second some of the other comments about risk management.

    I lost a ton of money buying options, blew up my account, and to make matters worst, it was money set aside to help my family buy a house. I had many, many sleepless nights full of despair and wanted to really punish myself for being so stupid.

    Most important thing here is to forgive yourself. It was an expensive tutition but most traders have gone through it. It sounds like you are done with the market. However, if you do plan to go back, I would not recommend it right now. You need some time off to clear your head, learn risk management, basic technical analysis. Revenge trading never works.

    My story does somewhat have a happy ending. Blowing up and becoming “poor” (or as poor as I felt in our priviledged first world country) really taught me to be frugal. As a result, I was able to save up a lot of money from my regular job and am now able to buy a house. Also, the best part? Those options that I use to stupidly buy? I ended up learing how to sell options and am able to eek out a modest income from it every week. I look back and think about how I blew up and I see how it needed to happen for me to get to where I am now. If you talk to most successful traders they’ll say the same too..that the original blow up helped them a lot in their eventual journey to success.

    I wish you luck and I’m sorry!

    • Thanks Gwen for the words of encouragement. I’m not sure my story will have the same happy ending as I’m thinking of just walking away completely from the market with my losses. I’m afraid to admit that I’m probably too much of a gambler to have any discipline. I blew up $130k in 2009 and now $195k again this year. I.m still in shock and can’t believe it happened to me…

      • Gwen says:

        Hang in there. Poor thing…I have totally totally been there. Worst feeling in the world but this too shall pass. At the end of the day remember that you are lucky to have your health (don’t let the stress get to you…money is fleeting but your health is permanent), your family, and your friends. If you take time to recover and learn to trade slowly, with a strategy, risk management…over years you can make it back. I read some later comments about paper trading, which I highly recommend. Take time out to practice and develop your edge. All the best traders have one and practice, practice, practice!

        Don’t let this experience go to waste. Don’t allow yourself to blow up a 3rd time. Think of a few lessons that this experience has taught you and use this expensive lesson down to the last penny.

        Please keep us posted; Though i don’t know you personally I can relate to your anguish and I’m hoping for better days for you!

      • Thanks again for the kind words and encouragement. Yes, I do have my health, but I have literally lost 10 lbs in the past couple months. No sleep and stress and rethinking and reliving trades in my mind over and over again. I still remember the feelings of each trade vividly. But I’m hoping to move on in one piece, albeit without my savings. I recovered from my first blow-up in 2009, but it took lots and lots of time…

  9. J says:

    You may one day be good at trading or you may never be. I went through all this playing online poker years ago. I’ve just started trading but already can tell it’s very similar to poker in that emotional control is the key. Some people gain it more quickly than others. For me, I blew up a few poker accounts before earning money. Luckily I was young and a “blow up” didn’t mean much.

    Think of it like this: for some people trading is like sky diving or another high adrenaline activity. If you have a strong reaction to it (the thrill) and have to make important choices in the moment, you’re going to make bad decisions. The only two options are 1. to recognize this and give it up or 2. acquire the emotional discipline necessary (a painful process).

    It took me about 1-2 years to really understand poker and acquire the emotional discipline necessary to be successful. Even then, I still never made millions (just enough to pay off student loans). Over time, you can become more like a machine that makes rational, emotionless decisions but everyone will still have occasional lapses.

    My advice, for whatever it’s worth is to either give it up or change your perspective and take pleasure in the struggle of grinding an account up from a small deposit. After losing all my money in poker a couple times I only redeposited $50. I had to play the lowest games and I played so much to grind that $50 into thousands that I became less vulnerable to losing control. Over time, I played millions of hands of poker (playing 4-8 tables at a time). On the positive side, I’m pretty good at poker. On the downside, without that thrill, poker is now quite boring. Even if you deposit small and work to grind up an account it’s likely you’ll still blow it up one or two more times. But, the blow ups will be spaced farther apart and during that time you’ll be in more and more trades, reducing your adrenal reaction to the stress and allowing you to make smarter choices (I don’t know of a short cut beyond being in more and more trades. Yoga? Meditation?). It’s a lot of misery with the reward of being that in the end, yes, you’ll be able to make money but trading will also become boring and you’ll put yourself through torture to get there. Good luck whatever you choose.

    • Thanks J for sharing. I’m leaning towards giving up completely, as I seem to lack the discipline. I don’t play poker, but on a related note, I was playing blackjack 10 years ago. I took $500 and turned it into $9000 as I went on an unbelievable hot streak while pressing my bets. I then told myself, I’ll play it slow and conservatively and only bet $50 at a time, just to play a little bit more for the action. But before the night was over, believe it or not, I lost it all… I swore off casino gambling then and have never stepped foot in a casino since. Unfortunately for me, the stock market can be a casino that’s even more accessible…

  10. Alex says:

    Ouch man… I see you traded yourself into the ground huh?
    When I got into the markets, it was because I was sitting down the computer science building of my college, and I overheard an interesting conversation between two undergrads:

    Trading guy: “Oh hey, you’ve made it.”

    Friend: “Hey… oh cool, you trade stocks? Have you made anything?”

    Trading guy: “Yeah, I make about a good $60,000 or so a year. It took me a while to learn though.”

    Friend: “Really? How did you learn? I’ve always wanted to know how people get into that sort of thing.”

    Trading guy: “Well, my father does a lot of trading, and one day, when I was in high school, I decided to ask him for a bit of money so that I could get into it. He had a savings account set aside for me for college, and I asked him if I could borrow some of the money from it. He thought about it for a minute, and then agreed to let me have $10,000 out of the college fund account to trade with. But, he gave it to me under one condition.”

    Friend: “What’s that?”

    Trading guy: “He said that I would get $10,000, and no more, until I lose every single penny of it. I then asked him what would happen if I made tons of money, instead of losing it. He matter-of-factly replied ‘In that case, I won’t give you any more of your college money to trade with until you’ve lost all of the original money I gave you AND whatever profits you’ve made.’ I told him that that was ridiculous and stupid and made no sense. A few months went by, and I made a good $50,000 by trading pretty aggressively with small-caps and penny stocks. I was proud of myself. My dad just watched without saying a word. Eventually, I hit a devastating loss, losing 40% of my account value in one trade. Then, another 30% loss followed, and a smaller string of 5% losses. By the time it was all finished, I barely had enough left in the account to cover commissions. That’s when dad finally chimed in: ‘You see? Now you know how it is.’ That was the day he handed me the rest of my college fund money. Of course, by then, I was too scared to put on another trade. So I went back, studied, traded with fake money, and learned as much as I possibly could. I didn’t want to lose all of my college funding over a stupid mistake.”

    That’s originally what got me into trading. I knew from the first day I was playing with fire. I knew I had to lose big many times before I was going to make anything. I’ve been spending the past two years trading with paper money as a result. Some smug people came to me and said that trading with paper money feels nothing like trading with real money. So I threw $1000 into a trading account (a pretty large amount of money for me back then) and tried to lose it all by trading as stupidly as possible. I succeeded. Felt exactly the same as losing fake money. So I went back to trading with fake money. If I couldn’t double a fake money account, I certainly couldn’t double a real money account.

    So anyway, some people here are saying you should have done this or that, but in reality, your biggest mistake is jumping in with tons of money and fairly little experience. You can lose 80% of $200,000 just as easily as you can lose 80% of $2000, so when starting off, choose the wiser loss. Get a few years of trading experience with a smaller amount first, learn the ins and outs of your own emotions (which, as you can see in your case, is definitely important). But above all, keep this blog up. It’s important for people to see the dangers of trading, and see it with real numbers and real trades. What you’ve posted here is very useful to others just starting out.

    Best of luck man.

    • Thanks for sharing the story Alex. You have a great story which others can learn from as well…

      Believe it or not, I have plenty of “experience” trading. Been trading on an off since 1997. My first account was $2000 and I eventually blew that up too. Doesn’t sound like a lot, but that was all my money back then, so it was painful. (I did eventually made it back in later years.) So I understand all the mechanics of trading and most of the dos and don’ts.

      However, what I have trouble with is discipline. And not chasing my losses with huge bets. I would often have a good streak of 1% or 3% wins, playing conservative. But then I’ll experience a 10% loss and then my emotions get the better of me and I chase it with a huge bet. And sometimes it has worked out and I get back my loss quickly.

      Unfortunately, this year, it worked against in the the worst way possible. I couldn’t believe the losing streak I endured, I thought at least one of my earnings plays would hit. But they all crushed me, one by one, with each earnings report swinging 10-20% overnight. Even when I was “correct” and they beat earnings, they popped up and then dropped like a rock. I obviously sought volatility in order to get back my money quickly and it worked against me in ways I could never have imagined.

      Thanks again for your well wishes…

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