I remember my biggest market losing days vividly, both very different experiences. My first one and more painful one but not for the reasons you may think, was when I was about 19 or 20, I was a working actor in LA, I had very decent saving and I had a money manager. I had done well trading for myself but I innocently assumed if I was trading well, surely someone at a Goldman Sachs or Morgan Stanley would do way better. I was and continue to be an overachiever in all the things I do, I saw the best in people because I saw the best in myself and projected that onto others. I use to say I see the best in people, until a coach of mine told me that “I See the best in people” is a rather arrogant statement, we only understand from our level of perception and thus when we say that, It’s not so much that we see the best in people but rather us projecting ourselves onto them, If they saw what we see, they would probably be us, and we only project what we would do if we were in their shoes.
He shows me a nice portfolio with glossy paper and colorful pie charts, I pick my “risk levels” based on no concreate or methodical strategy. silly me though we were talking about entry, exits and profit takes, volatile markets etc. well very quickly the stocks I bought where strongly out performing his. I was puzzled, I liked him and it was a strong bull market with all long positions, how am I Loosing? Why isn’t he just buying SPY ETFs if nothing else? One day I lost a sizeable percentage of my account, for what I now know was a terrible stock position. I was so upset, but I wasn’t so upset because of the dollar amount per say but rather because for one, I didn’t understand why and two if I cared so much about my account, why wasn’t I so diligent regarding the money I work so hard for, running away from home, working 15 hour days, riding the bus at 4am since I was 17? Why did I know the ingredients in my protein bar better than what was on my account? That is what was painful, and upsetting but I learned one of the strongest lessons, a few lessons and without that happening I would not be here today. Blaming the economy, my broker, a platform, the banks, lizard people, or the president wasn’t going to make the situation go away, it would also be giving all my control and power to someone or something else. Someone somewhere is making millions at this so it’s working for someone out there… That’s all I needed to know. What are they doing different, and where do I learn that. I knew the markets worked because I had made some money myself doing it. I Closed my account, It was awkward but not personal, I loved him as a person and he didn’t intentionally do anything wrong, at least I don’t think so. This is where my strong sense of personal responsibility came from, or maybe I’m just a control freak as many around me say! Ha. I took it upon myself to go out and find the best financial education, and I did, and well the best comes with a price tag, I didn’t stop and think about that until I was faced with the price tag. I had very decent savings and when I worked I got paid well by most American standards but I never knew when I was going to work next. TV & Film was in shaky grounds; New Media was rising and I knew its potential implications well. The Talent unions, The Screen Actors Guild & American Federation of Television and Radio Artist where likely to merge, and as a committee member in Many SAG Committees I knew this time it was going to be inevitable and the barrier to entry was going to free fall. I knew its expensive to be cheap especially when it comes to financial literacy. I took the leap of faith, I wasn’t going to be mediocre, and I just needed to know that one person could do it, If anyone could I could too, Real Estate was always on my mind but my parents had just got hit hard by it in 2008 and I wanted the leverage but leverage without liquidity, or any gains for that matter are irrelevant which is WHY I’m a strong proponent of the financial markets as the path of least resistance to anyone’s financial goals, So I moved forward and it changed my life.
My second loosing day was obviously now by my own doing. I was trading the Nasdaq futures contract and I lost way more than I should of allowed myself to, I was overtrading and I knew it, I didn’t follow my trade plan and I knew it, I didn’t do my proper news analysis and I knew that too and for all of that I was lucky, I knew what I did wrong and so therefore I could change those things, and those rules that my trading academy emphasized so much now became real and had intrinsic value. I felt very lucky all in all because for one I was still in the game, second, I can fix what I did wrong and know what I did wrong. Many traders and investors blow their accounts and don’t even know why, there’s no lesson to be learned from their blow, they may be out of the game or scarred, and it breaks my heart to think about that which is why I strongly believe that its expensive to be cheap, especially in financial literacy.
However, there were also a lot of new lessons I picked up along the way. The first one was ATR, (Average True Range) you must know the battle ground you’re playing in, know how much the asset or contract moves in the time frame you’re trading in. I was trading on the 3 hour, 30 minute, 5 minute, and entering in the one minute time frame, Why? Somewhere between overconfidence and revenge trading. I was also trading in one of the most historically volatile days in the market and my fills where awful, and I caught that late in the day… if you’re not a day trader, here is how you can put that into perspective; Imagine you’re going to out and surf next Sunday, you grab a globe from your desk, spin it pick a place with your finger and that’s where you’re going to surf without checking if there are sharks there, what the weather is and you just go because you know you’re a pretty good surfer. The Average True Range is how much a stock or asset will move in a specific time frame, and the One minute, 30 mins or day will be different. So I quickly learned the practical implications of that, I was always directionally correct that day but kept getting wicked out. I also realized how much money I didn’t need to make or loose just as much, this was a huge silver lining, people often blame resources or lack thereof for their situation when resourcefulness will go way further and this was a practical example of this. I was trading one Contract which was about a margin of a couple of thousand dollars, my account was tens of thousands, yeah I lost more than I was used to, but I was still in the game and for the intents and purposes of my desired outcome, which is mastering the financial markets to master the ultimate mental mind game, I didn’t need that much money.
Money was just a tool like a mechanics tools, the more you have the more contract you can buy and do the same thing and scale, but I was just buying one anyway, and this broker required a couple of thousands to control it, but If I where that upset about my buying power, I could go to a broker who at the time only required 500 dollars to control the same contract, I’d be a millionaire there. So I analyzed what was actually bothering me, and it was that I broke my rules, and if I knew I was breaking the rules in the process, how do I stop myself from doing it again? The lessons I realized where much more valuable, I knew them but now I understood them. The solution was to partition my wealth bucket from my income bucket and I became more resourceful in the process, I opened a futures account with the broker that required less margin, I put the bare minimum in there and I could control more than I could in my bigger account (Not that I Would) I ratified and solidified my trade plan, I set a global configuration stop loss and lock out feature on my platform to stop my from future overtrading, and to really analyze a trade before I jump in, analyze the entry, because If It turns against me too much, I’m locked out for the day. I was very blessed, I was still in the game, had a stronger trading plan, more buying power (not that I needed it, maybe I got myself in this predicament because I was too comfortable with my resources at that point) I knew what I did wrong and how to change it and put measures in place to keep me in line. Considered suspending myself from live trading and going back to simulator as a coach might, but I don’t believe in simulation trading beyond learning the platform because for one, sim trading without a trade plan is no more than a game, and fills can be vastly different depending on your trade style, I’d rather buy one share, one micro lot or one correlated ETF, I guess Future can be a bit different regarding sim. However, I did decide that if such actions happened again I would suspend myself. I also went back and took some classes from instructors that did some scalping, as I had lifetime retakes, trading in smaller time frames and the golden nuggets that came from that were incredible.
All in all every time I fall I get back up, what doesn’t kill us makes us stronger, there is always tomorrow, and that’s why I love the financial markets, there is so much to learn about them, but more importantly ourselves in the process, what makes us tick, (No pun intended) how we do one thing is how we do everything and the markets are a magnifying glass of so, why do we take profits early, do we really believe in our process, our rules? Are we certain we know our rules? Do we believe in anything at all? Do we take profits early because we don’t thing we are good enough? Do we let our losers run because we don’t think we deserve what we want? What do we think about money and why? Where did it come from? Do we subscribe to that belief system? People sometimes say you know a person when their back is against the wall. I respectfully disagree, we truly know someone when they have unrestricted access, are you prepared to be that person? Do you want to be that person, or even financial freedom? It’s much easier to play the blame game, to have no standards held to us, to blame someone else because It’s too hard to look at our decisions, the choices we made, what got us here, to take our challenges and put them in someone else’s hands. Do you like who you are deep down and what you would do with that access?
Many people antagonize those with access, but it can only be based on our perception, because it’s been put there or because it’s what you may do if you had that much access, it is us we are afraid of? Not because we have little power but because we have so much of it, and Money isn’t going to make you happy, happiness usually comes from seeing the Glass half full and being great full for it, and acknowledging the half empty side one asking if we can do something about it or two can we accept it? Furthermore, outside of being resourceful it’s my opinion that getting money out of the way to live on purpose, and in my opinion, that’s where the game of life starts. People often ask me why I work where I work or why I do what I do, or why I’m here, or writing this, I could be in a lot of places, but the reason I’m here is because If I can have a hand in helping someone become the best them, achieve financial freedom and they go out and change the world for the better, it’s worth all the people who took no action, can’t commit to themselves, all the potential I see walk out every day, all the things I want to say to help and can’t, if one person can duplicate or aspires to do all the things I want to do in this life, It’s worth all the time and efforts spent. There is much more competition in being average or mediocre than there is in being great, but great is for the taking for anyone who wants it, and its not about time, we all have 24h a day, it’s about whether it’s a priority enough to keep our Focus, you can spend your time driving but focused on an audio book or spend time in class day dreaming, but greatness focus, which is not just your time, but your mental, emotional and physical energy in achieving your “Why” if its strong enough, and if it is, it’s yours for the taking .
-Ruben Landon Dante