Hey Steve
For sure you will be back.
The worst loss I ever experienced was about $300k when trading client funds and whilst at the time it felt like the world had ended it turned out to be the greatest (and most expensive!) learning experience ever. It was also at a time in my trading career when I had just started trading client funds and had been on a good run for about 6 months and then disaster struck. The good news is that pain goes away and new opportunities always come along.
Here is a few things I learned from my losses that I would like to share with everyone:
1. Trading with wide stop losses and small profit targets works 9 out of 10 months but it is the one month when it doesn't work that can potentially wipe out all the previous months profits or worse;
2. In an extreme volatility event if choosing to trade reduce risk dramatically;
3. Extreme volatility is most likely going to be caused by an extreme change in market fundamentals. When this happens the beneficiary currencies tend to be the Yen and the dollar. With this in mind if someone is trading from a technical basis it may be best to ignore all short Yen and short dollar signals;
4. If trading from a trend following perspective then ATR is a great tool for catching some really significant trends;
5. Black swan events happen more often than we think;
6. Considering inter market relationships can also be used to filter technical trading - for example if the price of oil is going down dramatically it may be worth ignoring long EUR/USD signals. Or if the price of oil is going up dramatically then it may be worth ignoring long USD/CAD signals. There is much to be said for looking at the yield curve and seeing which currencies are expected to strengthen against others.
7. Trading client funds works better with 7 figures plus
I guess in conclusion my 'disaster day' caused me to take a good look at market fundamentals and somehow incorporate them into my trading model.
I remember reading in 2006 I think it was about that natural gas trader who blew up a $6B fund and a few months later he was able to launch a fund with about $1B of new funds! Amazing but tells me that life will always give you a 2nd (and more!) chance!
Good luck for the future!
For sure you will be back.
The worst loss I ever experienced was about $300k when trading client funds and whilst at the time it felt like the world had ended it turned out to be the greatest (and most expensive!) learning experience ever. It was also at a time in my trading career when I had just started trading client funds and had been on a good run for about 6 months and then disaster struck. The good news is that pain goes away and new opportunities always come along.
Here is a few things I learned from my losses that I would like to share with everyone:
1. Trading with wide stop losses and small profit targets works 9 out of 10 months but it is the one month when it doesn't work that can potentially wipe out all the previous months profits or worse;
2. In an extreme volatility event if choosing to trade reduce risk dramatically;
3. Extreme volatility is most likely going to be caused by an extreme change in market fundamentals. When this happens the beneficiary currencies tend to be the Yen and the dollar. With this in mind if someone is trading from a technical basis it may be best to ignore all short Yen and short dollar signals;
4. If trading from a trend following perspective then ATR is a great tool for catching some really significant trends;
5. Black swan events happen more often than we think;
6. Considering inter market relationships can also be used to filter technical trading - for example if the price of oil is going down dramatically it may be worth ignoring long EUR/USD signals. Or if the price of oil is going up dramatically then it may be worth ignoring long USD/CAD signals. There is much to be said for looking at the yield curve and seeing which currencies are expected to strengthen against others.
7. Trading client funds works better with 7 figures plus
I guess in conclusion my 'disaster day' caused me to take a good look at market fundamentals and somehow incorporate them into my trading model.
I remember reading in 2006 I think it was about that natural gas trader who blew up a $6B fund and a few months later he was able to launch a fund with about $1B of new funds! Amazing but tells me that life will always give you a 2nd (and more!) chance!
Good luck for the future!