Suicide because of loss. A story that didn't happen.
This is a story about how a good friend of mine lost over 700.000,- in 9 hours. And about the importance of the role of YOUR psyche in trading.
Some time ago, a fellow trader phoned me. Let's call him Tom. He traded occasionally, and by day was the CEO of a small company. We arranged to meet. It supposed to be an ordinary friendly conversation. There was no indication of what I was yet to hear...
- You know, actually, I have another matter - here Tom suspended his voice. - Last week I lost more than half a million in the market.
I'll admit that I was surprised. I knew he was making money in the market but I didn't think he was trading such amounts. Losing that kind of money for an occasional trader is no small matter.
Therefore, before talking to him, I repeated to myself 23 ways to deal with losses (gathered from various sources, including a group of the world's best traders I had interviewed at one time). I was anxiously awaiting the meeting, I have had various traders with big losses but such a situation not yet.
A loss of this magnitude, even more - in about 9 hours, can seriously shake the psyche. I have seen situations where people were on the verge of suicide, others were not able to sit down to the market for months, still others are haunted by remorse for years. The issue is as serious as possible.
At the meeting Tom told me what happened...
For several months he watched an outstanding trader who was able to grow his account 10 times in a month. At some point he decided that it was not difficult, deposited about 30 thousand and traded for a month. He took more than 670 thousand out of the market by putting 19 positions. Last night he decided that he would try to make it two million. He hoped there would be a move that would allow him to do so.
He sat down around two in the morning and put 3 positions. Each for more than 40 lots.
A few minutes before eleven the next day, they were all automatically closed at a loss. The account was cleared to zero. As he told me later, these entries were outside the system.
To my surprise, Tom did not seem at all concerned about the loss!
I questioned him in detail about the incident looking out for any signs of trauma, or at all remnants of a severe experience. I found nothing. There was not even a lowering of mood! Tom, as usual, was in a good mood.
Intrigued, I began to inquire why he was not concerned about such a loss! I was sure she had meant something to him. It must have! True, he was the CEO of the company, but he didn't earn that much in it to be able to forfeit 700,000 in one evening.
Tom responded to me with something that gave me food for thought for a long time and that I want to share with you:
- This is virtual money. As long as you don't cash them out anything can happen to them. It's a virtual entity, it can disappear as quickly as it appeared. Only when you have it in your bank account does it become real, but until it does - it's just a row of numbers. That's how I've always approached the markets. It's just numbers, nothing more.
Here he surprised me again. I encountered such an approach for the first time. For all the traders I have worked with so far, money mattered. Always.
The depth of what Tom told me at the time didn't come to me until a few months later.
In a nutshell, I can describe it this way…
Each of us has some image of the importance of money in life. We bring this image to the market. A big loss (as well as a big gain, I've had such cases) can throw a person off balance for days, years or permanently.
The essence of the problem is that the loss causes pain. This pain can be almost physical and can last for weeks or even months.
There are traders who go through months of hell because of losses. On top of that, there are problems related to, for example, the judgment of the environment and the immediate family.
I knew that the best traders are very tough and mentally resilient. This is one of the secrets of longevity in the market and the huge fortunes they build. Mental toughness is something I have been studying for many years, in the case of top traders it is outstanding.
Here I came to understand that mental toughness has many forms, and the lack of response to very difficult experiences can be due to a different perception of the situation, a different value system or a different value scale.
Tom is certainly very mentally tough, this I must admit.
The story described is an example of how different traders approach markets and money differently. The way one thinks about money determines the psyche's reactions to profits and losses, and consequently the mental load. As long as Tom treats trading as a game of numbers he will be calm about the outcome. Neither profit nor loss will shake him.
I'm sure I'll tell you more about this in other articles, because mental toughness is a little-known topic, and yet it's one of the pillars of success not only in trading, but... everywhere.
Give it a boost 🚀 and drop a comment so we know to publish more for you. Cheers!
Follow: www.tradingview.com/u/drSwierk/
Some time ago, a fellow trader phoned me. Let's call him Tom. He traded occasionally, and by day was the CEO of a small company. We arranged to meet. It supposed to be an ordinary friendly conversation. There was no indication of what I was yet to hear...
- You know, actually, I have another matter - here Tom suspended his voice. - Last week I lost more than half a million in the market.
I'll admit that I was surprised. I knew he was making money in the market but I didn't think he was trading such amounts. Losing that kind of money for an occasional trader is no small matter.
Therefore, before talking to him, I repeated to myself 23 ways to deal with losses (gathered from various sources, including a group of the world's best traders I had interviewed at one time). I was anxiously awaiting the meeting, I have had various traders with big losses but such a situation not yet.
A loss of this magnitude, even more - in about 9 hours, can seriously shake the psyche. I have seen situations where people were on the verge of suicide, others were not able to sit down to the market for months, still others are haunted by remorse for years. The issue is as serious as possible.
At the meeting Tom told me what happened...
For several months he watched an outstanding trader who was able to grow his account 10 times in a month. At some point he decided that it was not difficult, deposited about 30 thousand and traded for a month. He took more than 670 thousand out of the market by putting 19 positions. Last night he decided that he would try to make it two million. He hoped there would be a move that would allow him to do so.
He sat down around two in the morning and put 3 positions. Each for more than 40 lots.
A few minutes before eleven the next day, they were all automatically closed at a loss. The account was cleared to zero. As he told me later, these entries were outside the system.
To my surprise, Tom did not seem at all concerned about the loss!
I questioned him in detail about the incident looking out for any signs of trauma, or at all remnants of a severe experience. I found nothing. There was not even a lowering of mood! Tom, as usual, was in a good mood.
Intrigued, I began to inquire why he was not concerned about such a loss! I was sure she had meant something to him. It must have! True, he was the CEO of the company, but he didn't earn that much in it to be able to forfeit 700,000 in one evening.
Tom responded to me with something that gave me food for thought for a long time and that I want to share with you:
- This is virtual money. As long as you don't cash them out anything can happen to them. It's a virtual entity, it can disappear as quickly as it appeared. Only when you have it in your bank account does it become real, but until it does - it's just a row of numbers. That's how I've always approached the markets. It's just numbers, nothing more.
Here he surprised me again. I encountered such an approach for the first time. For all the traders I have worked with so far, money mattered. Always.
The depth of what Tom told me at the time didn't come to me until a few months later.
In a nutshell, I can describe it this way…
Each of us has some image of the importance of money in life. We bring this image to the market. A big loss (as well as a big gain, I've had such cases) can throw a person off balance for days, years or permanently.
The essence of the problem is that the loss causes pain. This pain can be almost physical and can last for weeks or even months.
There are traders who go through months of hell because of losses. On top of that, there are problems related to, for example, the judgment of the environment and the immediate family.
I knew that the best traders are very tough and mentally resilient. This is one of the secrets of longevity in the market and the huge fortunes they build. Mental toughness is something I have been studying for many years, in the case of top traders it is outstanding.
Here I came to understand that mental toughness has many forms, and the lack of response to very difficult experiences can be due to a different perception of the situation, a different value system or a different value scale.
Tom is certainly very mentally tough, this I must admit.
The story described is an example of how different traders approach markets and money differently. The way one thinks about money determines the psyche's reactions to profits and losses, and consequently the mental load. As long as Tom treats trading as a game of numbers he will be calm about the outcome. Neither profit nor loss will shake him.
I'm sure I'll tell you more about this in other articles, because mental toughness is a little-known topic, and yet it's one of the pillars of success not only in trading, but... everywhere.
Give it a boost 🚀 and drop a comment so we know to publish more for you. Cheers!
Follow: www.tradingview.com/u/drSwierk/