I don’t know how long it takes the average trader to turn a penny in this game. For some, who were lucky enough to fall into trading during a raging bull market it’s possible they were instantly profitable.
It wasn’t like that for me. I got lucky on about two trades, then lost it 10 times over on the next trade. From that point I consistently lost money for about 2 years. Every time I’d win a little, I’d lose a little bit more and I never seemed to gain any ground.
It hurts. It really feels crap when you’re losing what someone else is working hard to bring in, when all you really want is to be contributing something of value.
Losers make the best winners, and winners make the worst losers.
I’ve heard of traders who fell feet-first into a massive bull market, only to lose it when faced with 2008. That market was such a shock to them that were entirely unprepared to handle it, and subsequently didn’t. They gave up – the pain of losing was earth-shattering to them, because they’d never had to learn how to handle it.
I feel grateful for being a huge loser. It’s given me a sense of respect for the market that I don’t believe I would have been able to develop without it.
It’s given me the impetus to discover creative ways to manage risk, to be massively curious about ways to refine my strategy and to explore, poke and prod until things make sense.
Without the experience of being a loser, I’d have taken it for granted that I was a winner. I would have had no reason to improve, because I would already be winning.
Winning can take away the burning desire to be better, because you can be fooled into thinking you’re as good as you need to be when in fact you’re just mediocre compared to what’s possible. When you’re losing, you can’t hide behind mediocre. You have no choice but to improve – and from my experience, just being better is not worth the effort.
It’s not worth the pain to just be a pretty good trader. I haven’t spent 2.5 years losing, only to reach a peak of just over bank interest.
It has to be more than that. You have to let your losers drive you to not just getting better, but to achieving excellence.
And once you’re there, once you are a consistent winner, you need to value your losers. Value the fact that they ground you. That they remind you of your early lessons. And then, let them spur you on to even greater success.
Comments on: "Why Winning is For Losers" (13)
Hey Jess,
Love the post! Been reading your blog for about a month now and just started my own. Good luck and thanks again for the read!
Absolutely great post Jess. Spot on.
Brilliant.
Well said.
as most people get drawn to the markets for the first time during a bull market, most beginners start out being winners
especially people being used to being right (due to their upbringing, education), always having straight A’s (or being pushed to get them), will have a very hard time swallowing their first losses and, more important, actually learning from them
your first loss is probably the best one
http://stocktwits.com/dve845
You’re right – learning during a bear market has been a blessing, that’s for sure!
Thanks for your responses everyone, I’m really pleased you enjoyed the post. Please feel free to share it with anyone you think might be interested
Great Post.
As some one who read market wizards might understand that a lot of them have gone through terrible losses initially.Those like Kovner & Soros who had fairly good understanding of trading when they started and have and few profitable years under the belt also stated , when they both first experienced losses in 1981, helped them improve and see trading in a different light.
As i’ve read your articles, I think you’ve made some great points that would teach beginners all the basic essentials of trading(like Trading 101). If they understand those and execute them well by sticking to a plan they’d be on their way to being decent traders. I am surprised to hear that you had 2 years of losses before being profitable. So i am just curious as to how much and what do you know about trading when you’ve started.
I knew absolutely nothing about trading when I started, except that it was easy money
My first loss was about $8000, in a day – which represented about 20% of my capital. It was heartbreaking. After that I banked most of my account, and learnt with a much smaller account size.
My first loss was by far my worst one, and gradually they got smaller and smaller (in terms of account %) as I learnt about more about risk management.
I had no clue a stop loss existed when I first started, and I was writing put options in July 2008. It’s a miracle I survived to tell the tale!
Jessica,
Just drop by to say, I am totally impressed by your loss of $8000 in a day….
Just kidding. Nice post.
Haha – now i just have to match it with an $8000 win in one day….bit trickier now that I understand risk management!
How about this for a loss; $30, 000 which was 100% of my account. I lost this in the dot.com crash in 2000 because I was maxed out on my margin. I didn’t really know what I was doing and I didn’t want to accept a 10% loss on my trades which turned into 20%, 30, etc. until I finally got the margin call. When I got the call I just ignored it until one day I opened my etrade account to see a big FAT ZERO. It’s took me 10 years before I tried trading again. I’m still learning but its nice to know I’m up for the year even in this tough market. I figure if I can continue to be profitable during a tough market then hopefully I’ll be making a killing when the good times come around again.
Good luck Mike – taking small losses is almost a joy after experiencing a huge one