Hi Mike,

I think it’s crazy (in a great way) that a successful trader/prop firm manager/author still takes time to answer random question from traders… Thanks so much for considering responding to mine.

First, a bit of background so you know where I’m coming from. I started trading at the beginning of 2004 at a prop firm in Chicago that specialized in intraday stock trading, much like SMB. However, the training was minimal (1 week of classes, 2 of simulator with virtually no oversight, and sat next to a veteran) rather than the ongoing support SMB provides to its traders. I had promise from the beginning, was gross positive from the start, though I sometimes tended to overtrade. Was the first in my incoming class of 8 to have a $1000 day and the only one still there after a year, but I sometimes had more red days than others, especially when the market was slow. Long story short, I left after 3 years having covered my 2k a month draw but made little on top of that because I just needed to start making money to live on. I then went to work as an analyst for (XXXX) and became a trader on their trader product. I also traded on the side with some money I was given by my grandfather. Luckily, the market became excellent for my style of trading in the back half of 2007 and became downright amazing in 2008 and I blossomed as a trader and made significant money. I left briefing to focus full-time on my trading at the beginning of 2011. My profits continued with the usual setbacks until the beginning of October of 2011, which not-coincidentally was the low in stocks for 2011. When that happened, I was up about 1.2 million for the year and by the beginning of December I’d given back 1/3 of that and stopped for the year. It was still my best year trading, but I found myself in a very negative mental place because I lost that money by overtrading and making poor decisions

Now I find myself losing money again at the start of 2012 and haven’t found any kind of rhythm or flow with the market. I haven’t been this frustrated since 2006, when I left the prop firm. I’ve had setbacks before and confidence blips, but this is an oder of magnitude greater than what I’ve experienced before. I know I do best in emotional trading environments, (I crushed silver futures last year) but I find myself unable to simply wait for a better environment because I’m sitting at home with nothing to occupy my time except for trading and nobody else to help hold me accountable for poor trading. I’m in a bad mental place and the market doesn’t mesh with my style right now, but I already took a month-long break. My question in it’s most basic form is this, Will you talk about the time when you had the biggest “crisis of confidence” regarding your trading and how you got through it? It think just hearing that story might help me overcome some of my newfound trading problems related to confidence and conviction.

Bella

Confidence: Your resilience in the face of disappointment- Dr. Andrew Menaker

I wrote about this in One Good Trade. Check out page 313 and my experience in 2001. Essentially, I took a break. Every year I think this is the end. And then I do some thought and research.  I condense my playbook to my better trades and rebuild my confidence and PnL. Much of trading is taking the time to understand your best plays in the current market, finding more of them and trading them with more size. So I ask: what are your best plays in this current market?

Most experienced traders, who have known trading success and then like the trader above struggle, use plays that have stopped working in the current market.   All experienced traders go through periods of struggle and self-doubt.  I know one high level trader who seems almost distraught for months of every year before he runs into his next good streak.  I work with one trader who if he fights the trend could finish every month decidedly negative instead of his normal positive.

Thxs for reaching out.  Congratulations on your trading success.  If you made money in the past you can going forward.  I have no doubt of that. It’s the guys who have never make money and just think a simple change here and there will make all the difference that I worry about.

I hope that helps.

Bella

One Good Trade