Trader Death

Trader Death, by my definition, is when a trader’s career is ended financially. This can happen many ways, but typically it’s a big blowout ala my first big blowup. Or the “death by a thousand paper cuts” mode which seems to have claimed another casualty in Trader Bubs. Whether voluntary or involuntary, trader death sucks.

If you have experienced trader death or are close to experiencing it, what can you do? Here are 3 steps you must do.

1. Stop Trading: What you are doing isn’t working. You need to stop the bleeding. For whatever reason, the system you have chosen is not working. It might not even be you. It could be the market you have decided to trade no longer “works” for your system. The problem could be psychological. We’re all vulnerable to cognitive biases that can wreak a perfectly good trading strategy. The point is to protect your capital and live to trade another day. But what if you’re already “dead”?

2. Get a job: Ugh, I know. No one wants to do the 9 to 5. Working in a cube would be ultimate failure. Firstly, if you treated trading like a 9 to 5 job, then that’s part of the problem. To be a successful trader, you must be the worst boss you ever had. Trading should have been a 14 or 16 hour job when you’re learning. I’ve been at it over a decade now, and I still spend ungodly hours in front of the screen. Researching, studying, analyzing my mistakes.

A job outside of trading doesn’t have to be seen as failure. There are many fulfilling opportunities out there. Besides, this job will help you fund your next attempt at trading which brings me to my next point.

3. Never give up: Have you ever heard the story of Thomas Edison? How he failed 9,000 times before he created the light bulb? The only thing that made him successful was tenacity. Think about this: How many opportunities do you allow a child to learn to walk? Do you let the kid try once then give up? “Nope, that’s it. Sorry kid. You tried it, you failed. I guess walking isn’t for you.” That would be ridiculous, wouldn’t it?

The point is that you should never give up. Each trade is an opportunity to learn and do better. Look over your trading journal or your blotter and do an analysis of your trading history. Where you went wrong and why.

So in conclusion:

Step 1. If you’re still trading and close to death, stop trading to preserve whatever capital you have. Or if you’ve already died then proceed to step 2.

Step 2. Get a job. It doesn’t even have to be in an office. Try something different. Go back to school. Instead of focusing on a job that pays well, how about a job that pays the bills and helps others?

Step 3. Never give up. Never, ever stop. Review your trading history and learn from your mistakes. That should give you some time to save some capital and get back in the game, at least in a small way.

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