Dr. Steenbarger wrote an illuminating post about improving your trading confidence and sizing through being tested.
We saw this yesterday on our trading desk, powered by KTG, with a top trader. He sure was tested and won.
Trader wrote of this trading session in his daily review:
Today, I had one of my largest swings going from down almost 45k to up 55k at one point. Reflecting on the day, there are some good and bad points.
Overall, really happy stepping up my game in my A+ situations. Things can always be better but you learn each time and you add it to the experience bank.
Notice how trader appreciates being tested and the overall trading experience so he is better in the future.
Notice how trader is happy to have added size when the moment is right for him. Trader is not just trading bigger to trade bigger. A common mistake of developing traders.
Notice how ending the day with PnL above 45k contains good and bad to this trader.
The real prize for this trading session to this 7-figure trader is the experience of being tested with larger size, feeling what that is like, struggling at times, facing fear, being uncomfortable in real-time, and learning. As a result, his sizing, drawdown, upside will all be larger in the future, allowing trader to grow his PnL.
I might note, tangentially, that this is a real trading example of the value of trading at a Tier 1 prop firm. When trader was down 40k he asked our risk manager for more room on his intraday stop limit. The risk manager reached out to the partners in NYC, who checked in on the trader’s temperature (was he on tilt?), and approved the bump in risk.
How many other firms would have just shut down this trader for the trading session, with trader missing the opportunity to end up 45k? How many independent traders can bankroll a 50k intraday loss? How many of those traders can bankroll such a loss with their own capital AND not have that interfere with future trading? Being marked down 50k at a Tier 1 prop firm with deep pockets, that believes in you, focuses on building very large traders, trusts your ability to make decisions when stressed, made for a 90k difference in this trading session for this trader.
Trading bigger requires you to step outside of your comfort zone, placing risk that makes you feel uncomfortable, and learning from the experience. This is an example of one trader going through that process and becoming stronger as a result.
As always, I welcome your feedback at [email protected]
*no relevant positions