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You may or not find this useful, but some Big Picture Truths:
1) Trading the markets is about *Emotions*...not linear, logical thinking. You've seen that. But do you believe it, really? I ask because I've been there, done that...and far, far worse. Fact: Your emotional health is everything. Do not trade when tired, angry, etc. [See Denise Shull, "Market Mind Games"]
2) Have you researched (fact-based) "principles" for what the markets are all about...i.e., their fundamental (true) nature? Have you written them down? I ask because principles are essential to understanding anything. If you don't understand the markets, they can and will create *ruin*. Fact.
3) FWIW, below -- in my own words -- are a few of my Truths (principles) for what the markets are all about...and confirmed (for the purposes of my own perspective) via WSJ Gregory Zuckerman's "The Man Who Solved the Markets" regarding Jim Simons, Renaissance Technologies and their Medallion Fund:
(a) "Money isn't everything…BUT often we behave as if it is, and without sufficient regard as to how untrue that is." (e.g., the impact on Jim Simons' personal life...and certainly my own)
(b) "Whether for GOOD or for BAD outcomes…the UTILITY of the markets is like anything else: It is WHOLLY a function of the INTENTIONS & AWARENESS & CONSCIOUSNESS of the "user." That said, markets are inherently CONFISCATORY in the short-run."
(c) "CONFISCATION of others' profits occurs by BREAKING STOPS: "regression" and "return to Signal" price behavior that *overshoots* all recent local highs or local lows…*then* regresses. This is *Alpha Destruction*...the reason that markets exist. Proper Signal entry AND position retention are made impossible without experiencing Loss at some point." [Key info: --> See Rishi Ganti's presentation on YouTube, "The Future of Liquid Markets"]
(d) "Markets today are fundamentally a band of PIRATES: PREDATORY and CONFISCATORY in Nature. They predate upon: (1) "Alpha" (other's profits and/or monetary resources), and (2) Predictable and probabilistic human psychology...and counter to these humans' interests."
(e) "Markets today are designed to CONFISCATE others' profits by substituting them with either LOSSES or alpha-destruction (AD), especially in the SHORT-TERM. The Why & How: "The money has to come from SOMEWHERE…and there are MARKERS for others' POSITIONS."
(f) "Markets CAN and WILL EXHAUST a human being's decision-making ability, which will default to REFLEX behavior…which WILL be WRONG…FREEZE...or be TOO SLOW to respond to losses. And this will be EXPENSIVE."
(g) "Markets today are automated and DO NOT TIRE of taking others' money, and PROFITABLY RELY upon consistent, persistent and COMPULSIVE human behavior -- especially WHEN triggered by anger and outrage -- in order to confiscate their monetary resources."
(h) "Markets CAN and WILL *PERSIST in their CONFISCATION* far beyond any individual's ability to sustain losses: The strongest, MOST "RESILIENT" individual who INSISTS upon UNAUGMENTED HUMAN BEHAVIOR while trading is the one who will be RUINED."
(i) "Markets CAN and WILL *INCITE* an individual to emotionally RIOT upon LOSSES…making those losses FAR worse."
(j) "Markets CAN and WILL *PROVOKE* an individual to emotionally RIOT upon "IRRATIONAL" behavior in market pricing. The LESS sense a market makes…the STRONGER the move can be. *MARKETS ARE NON-LINEAR…NOT LINEAR.*"
I have more, but I'll stop there. And having said all that, I do still develop systematic managed futures systems for my own personal use, but I no longer have any illusions about what the markets are, nor what my role is (and what that makes me) by continuing to play in them. They're not nice. And neither am I (when trading).
An excerpt from "The Man Who Solved the Markets" -- a description of an art piece in Jim Simons' office:
"On his wall was a rather gruesome painting of a lynx feasting on a rabbit."
I trade with options now. Absolute worst case scenario i lose the entire value of the option, which is typically 1.5% of my capital. Also makes you immune to gaps or getting your stop blown past. I miss the simplicity of trading contracts but not the headache. If I lose the entire value of the option (which seldom happens) I absolutely don’t care. Sometimes I’m even happy because I’ve learned something. After five years trading is finally a bit tame for me. It is a job after all and getting mad at the boss (the market) is pointless. Because the market is largely random, most systems don’t work. It is very hard to be consistently profitable. Most traders should just put their money in an index fund and get a job.Because of turbulence and fat tails, black swan events can crush you. Ask Long Term Capital about that.
I think you need to take the "excitement" out of trading and the only way I know how to do that is to position size correctly (i.e. limit bet to 1-2% of stack or whatever is appropriate for your style). Continue scaling up and down like a robot.
Then find a hobby that allows you to release / deal with emotions you enjoy that don't involve $$$ (e.g. sky diving) to get "your fix".
Now you're happy because you have $$$ and excitement. Just pray your parachute never fails.
Took many of us a few accounts before we had "what not to do" seared into our trading DNA. Cold sweat revenge trading followed by fetal position in closet very painful. But can be a powerful teacher.. There is a part of me I make sure remembers pain of blowing up accounts, so when I am tempted to break my rules I stop. I have found if I break my rules once very hard not to break again which usually has bad consequences.
Word of encouragement you can recover and be a better trader in the long run
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
You can’t go 1000% return without taking huge risks.
It’s not randomly that hedge funds, private banks, investment
banks, prop firms have risk Departments that do only that
and control/manage the traders.. think about it..
Thanks for sharing, good luck and don’t be to hard with
yourself we all did it, more or less.. Learn new ways to trade and stick to your risk rules, always.
These two sentences are everything in a nutshell. These sentences simultaneously represent power and weakness. So what?
These qualities of yours are power when they serve you well and weaknesses when they disserve you. Grit is when you succeed, stubbornness is when you fail. Otherwise, they are identical. The same is true with confidence vs cockiness.
The same is true when trading is a part of you.
So how does knowing that help you?
First, know that you have the knowledge/understanding/skills to succeed and make money. Never doubt this.
Second, know that what makes you capable of winning equally makes you capable of losing (personal ability is exactly like leverage). Never doubt this.
Third, and most important, you have got to be able to recognize when your personal abilities are disserving you; i.e., when you're being stubborn and not gritty, cocky and not confident. When you're living in dreamland, not reality. Always have an alarm system. When it starts ringing, stop trading live, revert to sim.
-=-
I'm sure you're looking for some wise wisdom from up high on the mountain top. But the simple truth is that you stopped listening to your warning system. The fire alarm rang and you went back to sleep in the dreamland where you had it all figured out. Real life is never that dreamland. You got lazy and cocky. That's it.
How do you fix it? Don't get effing lazy and cocky. Have an alarm system, and heed it when it goes off.
This isn't complicated. Don't make it complicated.
I love you man. I do. You messed up. It may take a while to get back in the saddle, or maybe not. Even then, it may take a while until you ride like you used to. That's fine. Whatever. But you can clearly ride.
Start back trading again on Monday...this Monday. Don't fall victim to thinking you are in control of what happens to you. You only control your own behavior.
Bottom line, have an alarm. When the alarm rings, stop trading live. Revert to sim for that day and the next day. If a weekly alarm goes off, stop live trading for the remainder of the week. Go sim, then go back to live. If you need to, repeat. Every time the daily or weekly smoke alarm goes off, stop trading live and go to sim. Always heed your alarms.
You are getting a lot of advice, but it appears you don't have a trading strategy problem. Other than the fact that 7K to 70k in a few months may be unrealistic, so your initial decline of 18k maybe quite normal, but you definitely have an emotional problem. Your emotions are tied to your performance, which you really need to objectify. This means your up periods make you as emotionally out of balance and as your down periods, that's why you lost what you made. If you have big up period you need to take a break and get yourself "re-centered" to reality by getting away from the screen. Different people need different ways of doing it, but you need to find a way to connect to the fact that the money is real with important risk costs being incurred. Maybe take some money out and go on a week trip with your girlfriend somewhere with no internet, or do some volunteer work with the less fortunate, get a hobby, build something, whatever works to get mind clear. Most career traders will tell you that they have gone through the same as you, it's part of the process of trading evolution and personal development. I believe what makes good traders is that they see a reality that others don't. What makes bad traders is that they don't see reality at all, i.e. they are basically gambling. You need to make sure you maintain an acute sense of reality.
