Good or bad, it does not last forever.

Originally appeared in October 2011.

If you have read the blog for awhile you know the story about the first day I sat down at my own machine.  I was placing a few trades a week though a friend with success.  It was limited to whether I found a good setup and he was in a good enough mood.  I thought it was going to be easier, no restrictions.  So the first day I made $670 dollars.  I did the math.  220 trading days times $500 (you know because I may have a bad day and make $170 less) I was going to make 100k.

I had absolutely no idea how I made that money, I just did.  I thought I had a plan but I didn’t.  The next day I lost around $620.  I was short the Russell and the S&P and it went in my face.  I forgot to put a stop in one of the markets and lost like $300.  I was so great I could trade two markets at the same time the same direction.

What was the difference between those two days?  I happen to find the good trades before I found the bad ones the first day.  

I can’t stress how important it is for you and every trader to understand the difference between an anomaly and a trend.  If you take a single data point and extend it across time the results are never accurate.  The math went from making 100k to losing a 100k that year.  Neither of those things happens.

Remember winning never lasts forever and losing does not have to last forever, do not get caught up in a single personal data point. Determining if it is an anomaly or a trend will dictate the adjustments you need to make.  Those adjustments will allow for a smoother equity curve and stability.  Work hard each day and improve.

No matter what happens in trading it does not define you as a person. 

We would really appreciate your feedback, if you like, hate, or think we are full of crap. Please leave a comment, a voice mail (312) 725-9121, email info @ traderhabits (dot) com or twitterstocktwitsyoutube and facebookSubscribe to Traderhabits by email or to newsletter.

The services and materials provided should not to be interpreted as investment advice, an endorsement of any security, commodity, future, or personal investment advice, or an offer to buy, sell, hold or trade futures, options or commodity interests or a recommendation to buy, sell, hold or trade futures, options or commodity interests. You assume the entire cost and risk of investing and are solely responsible for any and all gains and losses, financial, emotional, or otherwise, experienced, suffered, or incurred by you.

Read previous post:
10 ways to hide you are a trader.

One of the best part of trading is the lifestyle. Like all of trading there is risk on the other...