08/11/08 05:50 GMT Session Open
Good Morning All,
Hope everyone had a splendid midsummer weekend. Hot here in beautiful Southern California.
Blew up the account on Friday. Busted my butt all week trying to stay ahead playing support levels. I just got long a couple when it broke through the bottom of the range pre-Asia. Vicious break went 100 pips in no time. Friday in August, pre-Asia. Yeah I was expecting that. Reminiscent of the 2006 breakout on Thanksgiving Day. I was pretty much even for the week into the consolidation at 1.5200 Friday morning GMT but really tired from trying to manage things and getting woke up every couple hours from alarms triggering. Just hanging on to losers and booking profits staying break even and looking for the floor I was sure I'd find. Went
way too big looking for maybe 30 pips then I was getting out and getting some sleep. When it broke it was vicious times 2. By the time I was able to get fully out I wiped 57% from the account.
Went to bed for a couple hours and woke to find price off another 125 pips at 1.5010 or something and oil near monthly support. The first thing I did was say a prayer for the traders who aren't coming back. Oh man my heart goes out. I could hear the sobbing from here.
Got long a bit before the close as oil touched monthly support on the idea that some position closing would occur ahead of the uncertain weekend in the Caucasus. Traded back to -41% on the week.
This isn't the first time this type of trading took money from me under the same type of market conditions and it just shows me that I'm not ready to trade full time. I've been doing well and have shown good consistency over a stretch but obviously I still have growing to do and destructive patterns to work through before I commit money to full time trading. There's a lot to learn and it takes time. Surviving is key.
Lessons:
41% of my account is 25% of my monthly income and my bills are paid with 60% of my monthly income so I survived just fine. I believe this lesson should always be #1 but is often relegated to disclaimers-->
1) Never trade with money I can't afford to lose. This should be true whether I trade for a living or just on the side. Adequate capitalization is essential to longevity.
My strategy for this trade was not to drain 57% from my account.
2) It is a simple fact of trading that the potential exists to do enormous damage to ourselves - damage that can be way out of proportion to what we think is possible. --"Trading in the Zone pp25."
3) Apply lesson # 1 and #2 to stay in the game and learn from my mistakes.
So the screens are lit and I'm alive; hope everyone else is too. Congratulations to all who were on the correct side Friday.
