What's up everyone? All right? So in this episode, I'm going to talk about recovering from loss. So right now I am on a red streak I'm on my fifth consecutive red day was on Friday Uh, it's the weekend right now so I've got a little bit of time to kind of get some space between me and those losses. and I thought this would be an opportunity for me to record an episode on Recovering From Lost because the reality is for me. I have made well over 10 million dollars day trading and I wouldn't have been able to get to where I'm at today if I wasn't able to get really good at recovering from loss because losses happen.

you know, losers. Obviously, for even the most successful Traders you're gonna have losers probably 30 of the time. My accuracy is about 69 70 percent. So not every loss is a mistake.

But when you're on a slump, you're in a slump. You have five red days in a row, or several red weeks in a row. Or a red month. That definitely is a time where you have to reflect and look at what you're doing that's not working and try to make some changes.

So my thought was that by recording this episode, some of you right now who are at the very bottom of your slump you've been in a red streak for a while that you can watch this and you can walk away with some actionable things that you can do to help you reassess what you're doing right and wrong and to get you back on a good track. So what I'm going to kind of do is I'm going to walk you through what my process is for dealing with these losses and you know how I've been able to get myself on track whenever this happens. all right, So it's not really, probably super necessary to get into the specifics of my current drawdown because everyone's drawdowns are a little bit different, but one of the things that I look at usually pretty early on. Um, so for instance, for me I started with a red Day on on Monday and what was interesting about that was I was already having a little bit of a choppy day and you know I had been up I've been read I've been green I've been red been green kind of like up and down but never really to my daily goal and also not to my Max loss.

And but of course you know that by itself the fact that I was going sideways isn't really great. and then I jumped into a little bit of a wild card stock kind of a high risk trade. and in the past some of those high-risk trades have played out well, but this one, you know it didn't and I took a good size loss on it and that put me below my daily Max loss. Just like that.

Boom Done! So one of the things that I do adhere to is keeping a Max loss. So if I and I set mine at five thousand dollars on the day, so if I'm down more than five thousand, I'm done. Now there have there been times where I've traded past my Max loss certainly. but I'm trying to be pretty good about cutting it at five thousand and I did that on Monday Um, you know, then on Tuesday I ended up taking a trade on that same wild card stock, which was probably not a good decision, but it had gone up quite a bit more and so that in those two days I kind of went off the rails and then on days three, four and five, I was continuing to kind of grasp for straws, getting a little desperate to try to recoup losses and Salvage the week.

but unfortunately the losses kind of got bigger and bigger. So the reason I say all that is because it's important to have a uh period or to have a moment to reflect a process of reflecting on what you've done right and what you've done wrong and I have a little Journal that I use. So for me, I'll journal in that um, if I'm having like a really bad red streak or something like that and initially you know if I have a big loss on a single day or a really bad week, I can get really, really upset and really frustrated and that's usually not because I just had, you know, just lost money, but because I feel like I made a mistake because I feel like I took a trade that was just a a bad decision. Usually that's what gets me upset personally, But once I get emotionally activated.

once I'm upset. That's when I'm prone to make sort of that secondary mistake of chasing another stock and another another. and you know that's when things can start to spiral. and I used to call these snowball days where you know all of a sudden I made one mistake and then my momentum would start to sort of increase like a snowball, like rolling downhill, getting bigger and bigger and bigger and bigger.

until finally it sort of capitulates with this big big Monumental loss and some of you may have experienced that and I'm right there with you. I've been through that too and it's super super frustrating. Also, for what it's worth, you know me posting my recaps of these losses in these red days. I I Try to be very transparent about the fact that trading is hard.

This isn't something that's really easy. It's not going to work for everyone. You have to be very resilient to be able to get back on the horse after getting knocked down so many times and there'll never be a point in your career as a Trader where you won't get knocked off the horse. I mean it's just simply, it's part of this career.

Which is what makes it so difficult is that every you know every couple weeks or whatever it is, every couple months you're going to get knocked down and you have to be able to get back up. So for me, part of getting back up and being able to brush myself off the first is getting a little bit of separation from the emotion because initially I'm furious and you know I I'll say oh my God I'm such an idiot I'm so stupid um I actually I call my lawyer I asked if I could file a lawsuit against myself for defamation I was like I'm gonna Chuck you know, get some money out of this. He's like, no, it doesn't work that way so you know, talking badly about yourself, it's not helpful and it's not going to get you anywhere. but that's part of sort of the uh, the grieving process, the anger of having a loss.

So then once you get through that, at least for me I kind of want to get back to the drawing board and look at you know the the Carnage and figure out okay, let's start to piece through this wreckage and figure out where did I go off the rails? uh, identify when things started to go bad which for this particular drawdown, happened with a couple of wild card stocks I had been doing really well for the previous I don't know eight well it had been since October Um so October November December January February It's been like almost four months since my last like drawdown and I had been focusing on trading just the most obvious stocks each day. Uh, and that did mean I missed a couple of wild card moves but in any case, um, that had been working well. so you know I can see that that's where I kind of deviated and that's where things went off the rails for me. and then once I was off the rails I kind of got into this sort of a little bit of desperation of trading stocks a little outside my strategy and that made loss is a little bit bigger.

until finally, uh I was starting to trade a bigger size just to try to. like you know I don't know. recoup some losses in one or two big trades but had a couple more losses so it could be very quick. But in any case, I think it's important to have a process of looking back at the wreckage and figuring out where you went off the rails because if you can identify that, then that kind of helps you be like okay I need to reset to that point.

it's like in a video game like I need to re I need to load from like my last saved point the last time I was doing well and the last time I was doing well was before I started trying to trade these Wild Card stocks. So I need to reload till like right then so you reload to then uh and then that's kind of part of like getting sort of back on track. So for me I make a game plan and my game plan for right now after you know five red days is all right. So starting on Monday what I need to focus on is going back to doing what was working so well before trading only the most obvious stock, keeping my share size moderate.

Um, you know which Again, these are all things that are very specific to me. You'll find what's specific to you but you know you go back through and you ask yourself what was working before and then I need to go back to that. One of the things that I have the benefit of is being able to look at my metrics and say listen, I'm still a Trader even as a frustrated as I am right now about the slump. I'm still the trader who's made you know x amount over the last year or x amount since my last drawdown.

If you're someone who's at the very beginning of your learning curve, you may not have that benefit and that's why I encourage people to start by trading in a simulator and to not trade with real money until you first built that track record because that track record serves multiple purposes. The one purpose is of course, proven that you kind of know what you're doing before trading real money. But the second purpose is that when you have your first drawdown, you're able to look back at those metrics as sort of a source of confidence and you know it's like an affirmation. You see that you're like I know what I'm doing I can do this again I will recover again and I think that's really important.

So if you don't have that, then you know a drawdown could be an opportunity for you to press the reset button in a way put the main account on hold while you trade in the simulator for three to four weeks to sort of build up a little bit of track record because it's important to have that because otherwise you really don't know whether or not your strategy even works. If you just start and you just start losing money right away, you don't know, you know whether or not it works. One of the most stressful things, uh, as a beginning new Trader is your first drawdown because when you have your first draw down, you're going to ask yourself, wow, do I even know how to trade Like was everything I made in the last you know, week or x 10 weeks? Whatever it was three months? Was that just a fluke? Was it just beginner's luck? But this is what you do. You look at the metrics, you say what was I doing during that period that was working? what did I do during these last few days or whatever it was that caused the losses, and can I go back to doing what I was doing before and so your recovery from that first drawdown.

When you recover from that drawdown and you make new highs in your account, that I think is when you really know you've turned the corner. So since I'm in a drawdown right now, my process of sort of getting myself back on track first reflecting on the wreckage. where did I make my mistakes, assessing what I was doing previously that was working and can I kind of restore to that mode of trading what was working. Now, it's possible that there's been a change in the market market sentiment has changed and the Market's not as strong as it was before for that specific strategy, which happens, and so that may mean for a period of time I can go back to trading what I was doing before, but I have to trade a little bit more conservatively.

maybe just one or two trades a day, maybe just a few trades a week. A bit more of kind of like being very, uh, very precise on the setups. I'm willing to trade the highest quality just to kind of bring down the frequency of trading a little bit because one of the things that's important is breaking the red streak and just trying to have a couple of small green days because the more space you have between you and that loss the the easier it is for you to kind of, um, find yourself sitting with the emotions. It's when it's really fresh, it can be really hard.

So I usually will put myself into a bit of a trade or rehab program where for the period of you know whatever it might be while I'm recovering I focus on um, being very having the guard rails up, being very careful about what I'm willing to trade. So I kind of trade a little bit with training wheels for a period of time and then once I feel like I'm starting to get some momentum back the wins at my back a little bit I start to take the training wheels back off and from a monetary perspective usually. so if I draw down ten thousand I won't start to take the training wheels off until I've recouped about half of my loss. If I'm down 50 000, you know it doesn't matter.

it's once I've recouped about half the loss, then I feel like I've kind of started to catch a little momentum and I'm moving back up in the right direction. So that's generally my process of recovering from loss. the trader rehab program that we have at Warrior this is something that I developed out of this process that I was kind of naturally doing. and so I turned it into a curriculum and into a class.

And there's actually I'll put a link right down below if you guys want to check it out for a um, a Fomo episode fear of missing out? this is we have a trading psychology team at Warrior where we talk a lot about these emotions because you know what you can tell is a lot of these drawdowns are triggered by emotion. Maybe a little bit of greed and overconfidence of trying to take that wild card, then sort of stubbornness and taking it a second time, and then the desperation of not wanting to be read. You know, when you're red, it's not a good feeling and so the brain naturally tries to alleviate that discomfort. And the fastest way to do that is to have a winner.

Which means all of a sudden your quality standard drops. So developing a awareness of these kind of habits bad habits a lot of Traders fall into is probably one of the first steps in being able to break out of those bad habit Cycles because otherwise you'll just keep making the same mistake. same mistake again and again and again. you have to develop awareness that you are in a sort of pattern that keeps resulting in these losses happening.

But having said that, I've been trading for more than 10 years and I still have drawdowns from time to time. So there this isn't a job where you know once you kind of I don't know, get get to a certain point, it'll stop happening. It will continue to happen. And I think that that just speaks to the fact that this this is a job that just requires um, a really good ability to be resilient to get back on the horse to be self-reflecting on.

Wow. Okay, I made a mistake and now I'm gonna separate from. that was the mistake I made to. This is what I'm going to do to start to rebuild so you know.

Check out that link down below for the Fomo episode: Focus on first assessing the wreckage. Where did you go wrong? What was working previously? Hopefully you have some metrics that you can look back on and you can say wow. Okay, over this past six weeks or eight weeks, this is how much I made. This is my accuracy, This is what was working and you can restore to that honest assessment of the condition of the market.

Is the market, has the market changed or was it just you? You know your emotions, maybe adapt to a changing Market put yourself, possibly into a short-term Trader rehab program where you focused on putting on guard rails, being very, very disciplined, trading, less trying to just build some consistency, and then once you've recouped about half of the loss, you can start to open things up again. and then you've got some momentum and hopefully you're on your way back to the highs if you found this helpful. I Hope you hit the thumbs up I Hope you share it with some friends I Hope you download that episode on Fomo and I'll see you for the next one real soon. Thanks for tuning in everyone.