Changes Ahead?

I don't know how many people even read this blog, but recently, I caught a little flack for my posts having an overly negative tone. I don't know whether it is only because I choose to blog when things are going bad, and therefore, I have something to vent, or whether I really am a "glass half empty" kind of person. Truly, I think it is a lot of both. So, as much as I would like for this to be a "utopia" post to prove the naysayers wrong, it ain't gonna happen.

Today sucked. It was my worst losing day ever ... a little over $800. I cut myself off a little after 1pm because I was just making bad decisions. I was trading emotionally and irrationally, and as a result, I lost a lot of money. Like a compulsive gambler or someone with an addiction, I knew what I was doing was wrong, but I kept doing it over and over today. I had 3 winning trades all day ... 3. And a whole bunch of losers.

And that has kind of been the pattern since late September. Last week, I was profitable but only a total of $25. This week has been an utter disaster for me. I think I am down a little over $1K this week alone. My winning percentage has dropped from over 60% the last couple of months to slightly under 30% the past couple of weeks. My winners are small, and my losers are huge. I have tried to spend the evenings reviewing my trades and figuring out what I am doing wrong, but I can't figure it out. I have sat down with my coach and other successful traders and tried to review trades with them. They say I am not taking profits quick enough when I have them. Maybe that is the case, but I always seem to dig myself such a big whole in the morning that I think each trade is going to be the one that gets me out. The majority of my trades start off good as 5 to 15 cent winners but I rarely ever take profits. Instead, I let them go back down and eventually I get stopped out of the trade for a 10 to 15 cent loser. Now, consider I trade with 300 to 500 shares at a time and each losing trade I make costs me between $30 and $75. It doesn't take too many of these to add up to $300/day or more in losses.

I know what many of you are thinking ... why don't you just take profits early from now on? Perhaps that will do the trick. However, I don't trade frequently, so my profits will never be large if I do this. Also, there is the risk reward ratio to think about. Ideally a trader wants a 1 to 3, risk to reward ratio. Considering I win less than 30% of the time, mine has to be more along the lines of 1 to 4, and that is to just break even. Therefore, if I am willing to give 10 cents, I need to try to make 40 cents on the trade. And frankly, finding those 40 cent trades are much harder than you would think. I also realize if I took quicker profits that I would have a higher winning percentage too, so I wouldn't need the large risk to reward ratio. After writing and thinking about this more, I am definitely going to try it tomorrow and see if it makes a difference. Maybe I have just been too greedy these past couple of weeks.

Regardless, the last couple of weeks have really made me do some serious self-reflection, and I am close to coming to the conclusion that I am just not cut out to be a trader. As I have always said, I love the challenge of it and I love the trading environment. However, there are some psychological and emotional characteristics that a trader must have, and I am just afraid I don't have them. Could I train myself to have them? Good question. But I am getting older, and you know what they say about old dogs and new tricks. I have always thought of myself as being resilient and able to bounce back from defeat quickly, but I am proving to myself day after day that is not the case. I am internalizing my daily failures and they haunt me. I know I need to shake them, but I have a difficult time. I am definitely my own worst enemy, and that certainly can't be the case, especially when you are playing against the market.

So, the big question is ... how much longer do I give myself? From the start, I said I was going to give myself one year. As much as I would like to hold myself to that, is that really the smartest move? I am now in my seventh month of trading, so that leaves 5 more months. However, I have already burned through over $12K in savings on this journey. Sure, I still have a little more, but I sure would hate to burn through another $12K and realize there is no pot of gold at the end of the rainbow. I have put my whole heart into being successful in this new career. I have constantly educated myself and tried new techniques. Sure I had a good run with SLV, but honesly, that was short-lived. Heck, I lost $100 today in that stock alone thinking I could still trade it. I'm sure there are more systems and techniques out there I haven't tried, but realistically, how many am I going to try and burn time and money in the process. On recommendation from RB, I have tried to coach myself positively the past few days. Especially today, but the same outcome occurred. I don't know how much longer I am going to give myself, but I do know the holidays are around the corner and the bank account is already drained. Add to that a perpetual losing streak, and I medication may be in the foreseeable future (if I can afford it).

The next big question ... what am I going to do for a living? I have thought about this a lot recently. I have thought about returning to the tech industry. Who knows ... maybe I could get a tech job at the trading company and play ping pong all day. That would be nice. However, I am not sure I would want the reminder of my failure haunting me on a daily basis. But everything has its price. I have also thought about pursuing another tech job, but I don't think I could program anymore. I am way out of practice and haven't even looked at code for the past several months. I wouldn't mind doing something in the financial industry, but most of those jobs are in Chicago and New York and I don't want to move there. I suppose the best opportunity I would have would be going back to teaching. In fact, one of the Math teachers at my wife's high school resigned recently, and they have posted his job. She mentioned it to me, so I think I am going to send my resume to the principal and just see where it goes from there. Ideally it would be cool to teach in the afternoon and trade in the mornings especially since the school is real close to where I work right now. We will see. I don't think I am ready to return to teaching full time right away, but that all depends on how desperate I get.

So there you have it. An extremely long post. Perhaps it is entertaining, or perhaps you don't even care. Whatever it is, positive or negative, it is where I am at in my life right now. Am I at a crossroads ... probably not yet. But I think I can see it not too far down the road from where I am at. Here is to hoping there is a side road or two along the way before I get there.