An anecdote from the trading desk after a trader’s biggest loss

One of our developing traders showed great progress last month. He was trading with real edge.  We were very proud of his work.

We were excited to watch him grow over the summer months. We talked internally with our support team about bumping him up for this month. And we did.  What came next?

Next came the big rip. Friday was his worst day to date. He took an outsized loss in LULU, after a period of illiquidity.

I was thinking about what to say to him this weekend. My sense was Monday, and this week, would be an important week for this young trader. Handled poorly and he would make the same mistakes many make.

I pulled him aside before the open and counseled, “Forget Friday. You traded with real edge last month. You cannot make up for Friday by pressing today. Just put together a string of good trading days, just like you did last month, from here.”

The trader appeared to me to have game planned a similar strategy. The talk was therefore short and trader went back to his trading seat.

Many traders attempt to make up for that bad Friday trade, the following trading session. This often leads to forced trades the next trading session and trading week.  This manifests a deeper hole for the trader.

This trader will be right back on track by end of week. It takes learning from Friday, but then going back to what he was doing so well.

*no relevant positions

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