Trader's Fortune Cookie

There is no motivator for progress as concise as loss.

Alter Ego

You got me in a vendetta kind of mood . . .

-- Vincenzo Coccotti, True Romance

I've suffered through a number of account blow-ups over the span of several years, and the root cause of each occasion without exception was the allowance of a few small losses snowball into catastrophe. I had tried any number of methods in an attempt to prevent future relapse, both tactical and psychological in nature, and although I made great strides in employing certain checkpoints to minimize the damage, the possibility of a meltdown continued to loom over each trading session. However, things began to change when I stumbled upon a realization about the nature of my fatal flaw that clarified the cycle by which everything would fall to shit, and at the same time offered a very neat solution to ending that vicious circle.

A losing trade triggers something inside me. A loss wakes me up, like a splash of cold water on the face, and gets my blood circulating like nothing else can while staring at a screen of flickering numbers. Hand me a string of losing trades, and a sudden appetite for risk, a "gung-ho" attitude you might say, overwhelms the usual performance butterflies, and at that point I fear nothing, am ready for anything. Unfortunately, by the time I've reached the point of looking for trouble, it's usually standing right behind me with its fist already stuck comfortably up my ass. Combine a fresh, hefty drawdown with a newfound lack of respect for further hazard -- well, let's just say it gets me from fist to elbow in a jiffy, sans lube. But what struck me one day was not the knee-jerk clockwork of my emotional buttons, nor the likely impossibility of ever eradicating them. It was instead the recognition that this fearless alter ego, which inevitably spelled utter disaster when allowed to take the reins in desperate circumstances, was exactly the kind of trader I've always aspired to be when all the odds were in my favor. This was the guy I needed to take the helm when the best opportunities arose, when the edge would cut sharpest and where bold and brash worked towards maximizing my advantage. My goal became (and remains today) to transplant this other persona out from a mere instinctual gut-reaction to hostile circumstances, and into an environment polar-opposite to its native one: positive, confident, and proactive. But no matter how clear this was to me in theory, there was no other way to break the habit but continual effort and repetition; reversing years of automatic response and re-directing my aggression to its proper place was not going to be easy.

Personally, it helped to accept my natural reaction to losses for what it really was: an almost childish need to "hit back" at my tormentor the market, and exact revenge for the pain I "suffered". It also helped to realize that however silly the idea of revenge was, I may never be able to truly rid myself of this response, no matter what the textbooks encourage. But if that's the case, then why let all those years of building a grudge go to waste? Only now, instead of flailing back in the heat of the moment, I just needed practice in swallowing my pride and waiting patiently, ever-vigilantly, for the proper chance to extract maximum satisfaction -- best served cold, so they say.