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. 

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