One of the toughest times of my life – that threatened my own psychological wellbeing as well as the potential safety and security of my family – was in early 2004, when I first made the leap from part-time to full-time trading.
I had the required knowledge. I had the required skills. I was a great technical analyst. And I had some demonstrated success in the markets.
But I was lacking in other areas. I was grossly undercapitalized. And despite my appearance as being someone with a positive and confident attitude, inside I was consumed with doubt and fear. Of course, I was unable to admit to either at the time.
Well, there’s nothing I know of that’s more effective for bringing all your fears out into the light, than quitting your full-time job to pursue a full-time career in market speculation.
With no other form of income available to support my family, it was all up to me to continue to generate the market returns that I ‘knew’ I was capable of achieving. Of course, almost instantly, my results failed to meet my expectations.
Thankfully, I still had the discipline to respect my stops, ensuring I did not have to face a single catastrophic loss. Although in some respects a single catastrophic loss could be seen as a blessing – at least it gets it over with quickly. Instead I spent the next few frustrating months grinding my way into a soul-destroying drawdown.
My mindset was a mess. I doubted my analysis, hesitating at entry until I got in way too late, or missed the trade entirely. And it seemed as if the only trades I did enter without hesitation were those entered out of frustration from missing the previous trade, rather than from good analysis. Typically, those trades do not provide the greatest edge.
I would take profits quickly; fearful that the market would snatch them back from me.
And I even ventured to depths I never thought I’d go – asking a broker for some trades. In his defense, his analysis may have been great. I just wasn’t in the right mindset to be profiting from any recommendations, no matter how great the trader or analyst.
Basically, fear of not being able to provide for my family led to doubt and indecision, which rendered me incapable of applying my trading plan in a consistent and disciplined manner, leading to realization of the very fear that it sought to avoid.
Fortunately, I was able to recognize the problem before the damage to our finances and my marital status was irreversible. Although I must admit, I took both right to the edge.
So, I took some time out to rethink my plans. I returned (with tail between my legs) to full-time work. And I set about preparing for my next assault on full-time trading.