There’s nothing that’s harder to start learning to swing than learning what to do when you think you’ve seen the worst case scenario unfold. There’s no point in learning and being a master at your chosen trade if you don’t feel the pressure to make sure you’re hitting good trades. That’s what makes trading fun, even when you’re losing money.
My two most important trading tips are:
Always be cautious when you’re trading something you’ve heard is terrible, and
Learn how to recognize when you’re getting burned
That’s all. I won’t spend the rest of this blog post going over any of the technical aspects of each trade. We’ll come back to those later.
As to when to begin, I don’t really know. There’s just too many other considerations for me to know now. It’s a combination of factors – how much you’ve lost, your overall risk vs. expected reward, and what leverage is – that I’ll probably never know.
For instance, on the day that I lost a huge amount of money, I took $1,000 from a client’s account (I think it was $2,000). After getting burned multiple times, I realized that I had lost $11,000 from that $1,000 deposit. Not only did that $1,000 get lost, but now I was holding $20,000 in my account after taking the money.
I made a decision to pull as much value as I could from a portfolio and sell it when it reached zero. And I’m sure that if I did this, I never would’ve gotten burned.
However, as you can see, I didn’t really get burned. The problem was that I got burned by my own trading. The lesson is really to learn from your mistakes and make sure that you’re never going to be as much pain as you were on the day you made a bad trade.
The next two charts are my trades over the two weeks after the $12,000 loss.
I’ve always enjoyed making trades on my own, so it was really exciting to make a deal that I liked.
In the first chart, I’ll show you how my $11,000 trade went down (green bar) against some of my best bets over the period, as a percentage of my entire portfolio (blue bar) – the biggest loss I’ve ever made on my own account.
From there, you’ll
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