Do you know who said, “I never ask my clients to judge me on my winners. I ask them to judge me on my losers, because I have so few”? That would be Jordan Belfort from The Wolf of Wall Street.
It’s an interesting saying and often rings true in trading. We actually can learn a lot from our losers. I am going to talk about one of the biggest loser in my trading career in order to help new traders avoid the pain of losing a lot of money.
I would like to think I hold the unofficial Guinness World Record for buying SLV at its highest price ever. I bought monthly calls too. Literally on April 28, 2011, at 48.35. I was that guy. It’s safe to say, I didn’t have a wonderful 23rd birthday on May 2, 2011, when SLV gapped down hard and ran for the hills like zombies were coming.
The signs are SO OBVIOUS now, but I was blinded then. Not by greed. By sheer optimism for the future. Did I exit? Nope. I was positive the trade would come back. That this was just a “dip.”
The trade never came back. I lost $16,439. What did I learn?
- I learned to repeat over and over, “buy low, sell high.”
- I discovered the emotions that lead to a bubble, and now I know how to spot them.
- I learned never to hold an option and let it expire out of the money. Losing 50% is better than 100%.
- Always honor stops.
- Admit when you’re wrong and get out. The market is always right. You aren’t.
Those are my main takeaways from this trade. They are likely things you’ll hear over and over, but I can assure you if your goal is to consistently make money every month/quarter/year – those sentiments need to echo through the halls of your brain constantly and consistently.
Until next time, remember – love life, live life, and trade it!