It started out just like any other day:
The day was January 23, 2008, exactly 1 year ago. The market was in a freefall for the past week going from 12,800 to 11,500 in a matter of days. It finally looked like it had bottomed, but the trend was still down.
At around 9:30am, I wrote my morning update, like usual. Then, near the 10am reversal time, I entered into a small short position of 2 YM contracts:
Again, nothing out of the ordinary. By 10:30am, I was down about -$230, after the failed short trade. Nubbins. No big deal.
At 11:25am, I decided to go long 1 YM contract at 11,909, added 1 more contract at 11,892, and yet another at 11,796 in my other IB trading account.
Again, nothing out of the ordinary. The market kept dropping, so I decided to take my loss on 2 contracts for -$569.24 and -$539.24, holding the last contract:
I was down about $1,300 for the morning with another $500 in paper losses because I was holding 1 long YM contract. Still not that big of a deal. I was bitter, but I’ve been down over a thousand before.
By 12:00pm, I went long 5 YM contracts, as the market had dropped all the way down to the 11,760 area. We’re definitely going higher today!
I was starting to get a little nervous now when the market didn’t start rallying. Maybe the market wasn’t going higher? Shit, I better get out of my long position before I get into some REAL trouble.
By 12:20pm, the market had recovered a little bit to the 11,825 area, so I started selling:
-$428.48, +$115.76, +$300.74, +$265.74. I got a little bit back from the morning’s losses. Sweet! I was flat now…no position.
By 12:47pm, the market had dropped all the way down to 11,682…good thing that I got out of that long position! Watching the action, I was like…oh man, this market is going to tank, I better get in fast! We were already down about 300 points for the day. So, I started shorting:
Nothing big…I was short 3 contracts at an average of 11,700.
By 1:48pm, the market had rallied another 200 points back up to the 11,845 area. I was sitting on 3 contracts with a 150 tick loss on each contract, which amounted to about $2,100. So, I did what every donkey would do and shorted more to average up:
Another 5 contracts near the 11,850 area. I was holding 8 contracts SHORT now. The market kept rallying.
At 3:13pm, the YM had gone all the way up to the 12,073 area, up over 300 ticks from my average. So, I did what any sane person would do…I shorted more:
Another 4 contracts at 12,073. 12 contracts short now, at an average of about 11,900.
By closing time at 4:00pm, the margin man started calling because I only had about $7,000 one of my IB trading accounts and I didn’t have enough to cover the overnight maintenance margin requirements (about $2,000 per contract). I got the following emails and they sold 2 of my 12 LONG contracts for -$1,864 and -$2,149:
At 4:15pm, when the market closed, I took a snapshot of my IB trading account:
The YM closed at 12,061 and I was holding 10 contracts short with a paper loss of -$7,756.30. The funny thing is that I had a buy-to-cover order at 11,790…hah. What a show.
When the market opened for trading again around 6:15pm, we were at 12,131.
Now, I was down -$11,256.30 on paper. Not to mention the $5,500 that I was down from closed positions during the trading day. Close to $18,000 in a few short hours. Still I did not cover.
I remember sitting on my couch, curled up in a blanket, glued to my laptop, watching every single tick, as the YM ticked higher. Every single tick higher was like a needle in my side. No shower, no dinner, barely even moved. So very bitter.
By night time, the YM had rallied another 200 points in the overnight session:
I had made the decision to sit by my laptop all night, just in case. By midnight, I was down $18,956.30 on paper:
I’m pretty sure that I felt a little vomit come up. That night, I slept on my couch with my laptop next to me, like a junkie going through withdrawal. I was numb.
Some time over the next few hours, I decided that enough was enough, so I made the decision to set an alert, and when it triggered, I would get the F out and not look back.
At 3:20am, my alerts started going off and I started covering. By 4:30am, I had covered 5 contracts near 12,230 for about -$11,000. Still holding another 5 contracts with the exact same amount in losses.
The next morning, the market continued to rally. By noon, the market was up to 12,340. Stupid me, stubborn me, I short 5 contracts again for 10 contracts total. Within 15 minutes, I was like…WTF am I doing? I covered for near breakeven. Over the next two hours, I covered my entire short position in the 12,300 area:
Total loss? $18,108.90 + $5,790 = $23,898.90.
There I was. Sitting on my couch. With a little vomit in my mouth. My shorts nearly soiled. Smelling like shit. Staring at my laptop. Wondering how I just lost $24,000 in one trading day. I told myself, never again.
The sad thing is that I’ve lost more before, like that GOOG options trade back in June 2006, but for some reason, this one hurt more. It was definitely the lowest that I’ve ever felt in my trading “career”.
In hindsight, funny as it may sound, I think that it was actually a good thing that I lost all of that money because the truth was, that day helped me realize that daytrading wasn’t for me. That style of trading wasn’t for me. I spent way too much time, making too little money, dealing with one emotional roller coaster after another; it wasn’t for me.
NOW I KNOW.
I spend a lot of time trying to figure things out…whatever that “thing” may be. That day made me realize that I was better off and happier when I wasn’t daytrading.
So, done I am with daytrading. That’s Black Wednesday revisited. Maybe you have a similar story that you’d like to share with everyone?
Finally you put it out, I was waiting a year for this. I do something similar few times a year so it’s like catharsis to read about it. I’ve done similar thing last week.
↓ Quote | Posted January 24, 2009, 5:16 amThe most interesting thing is how in heat of battle you totally forget what was your original direction. You was trying to go long whole morning. Than when you change decision, got stuck in losing trade, you can’t change it back. You just add, add, add in the same direction. You just can’t close it all, or close it all and reverse the same amount. It’s like trans. Nothing can be done to save yourself out of it.
Yup, everybody’s been there at one point or another. I remember that day vividly…I could’ve gotten out around 2pm for about -$2000 on the day, but in that “blink” moment, I hesitated…and then the rest is history. From -$2000 to -$24,000 because I didn’t react in that “blink” moment.
↓ Quote | Posted January 24, 2009, 10:41 aminevitable. you were not a good trader. best of luck in your affiliate program.
↓ Quote | Posted January 25, 2009, 10:57 pmI cant believe this. I thought your were going to end the story,,, “and this was the story of HPT”.
You held those pictures for 1 year to wait until today to post them.
You should have made a video,, then you may have been “FAMOUS” like me. j/k
When you made a post awhile back about the 3 types of trading websites/blogs, I was pretty sure you were referring to me as the trading blowup blog. I don’t see that post anymore, cant find it. That post kinda pissed me off, but it was true. I still get a lot of hits related to the video blowup and many negative comments from anonymous people.
PS- BigMac’s are over 3 bucks in CA (think 3.29),,, I think I read you said you got them for 2 something.
Congrats on the 10 mile run too, I want to do a marathon this year, I like the running schedule you posted.
I like your blog a lot.
↓ Quote | Posted January 27, 2009, 1:58 amI like this post a lot and would like to link it.
HPT
Hey HPT, I don’t remember writing about the 3 types of blogs…maybe you were referring to this:
http://www.boogster.net/blog/?p=3189
Or this:
http://traderfeed.blogspot.com/2006/11/three-market-idiots.html
i get bitter when people link to one of my blowup days too, like this donkey:
http://canuckinvestor.com/2009/01/26/click-click-bewm/
They never link to the good days.
Big Macs are $2 here due to the hurt-ing economy, although job loss is probably not that bad here in DC
I would like to do a marathon one day, but I don’t know if I’ll ever be motivated enough to actually do one. Definitely a half marathon though. Maybe even this year.
I have no objections to you linking to this post. The past is the past and there’s no way that I can change it now.
↓ Quote | Posted January 27, 2009, 8:47 amI link to this but it’s not disrespectful. I just think this is very valuable lesson. You for sure learned from it. I still do things like that, so I didn’t learn it yet. There are a lot that could be gained from story like that.
↓ Quote | Posted January 27, 2009, 9:14 amIt always sucks when you realize how easy it is to lose so much in one day, yet there is no way you would ever have done the reverse of those trades and been up $20K in one day.
I had a similar day like that where I blew $30K in my account and another $20K in my fathers. I wasn’t pissed off though, only because I covered my shorts after a small drop, regaining some loss, only to see the stock move up much much higher. So if I hadn’t covered I woulda lost 2x as much.
Anyway I know you hate my comments, but I enjoy reading your blog hehe.
↓ Quote | Posted January 27, 2009, 10:32 amFX, you’ve been reading my blog for a long time, so I forgive you.
Cyb, I only hate your comments most of the time, but this one was okay.
↓ Quote | Posted January 27, 2009, 10:40 amYou know how to make yourself feel better? Think about the thousands of clients I ponzi scammed. Think about all those donkeys that lost their life savings. These are regular joes who lost their life savings when they are already retired. Or all the charities that lost everything.
Think about the how Nicholas Cosmo spent $140 million of his clients’ money
http://www.newsday.com/services/newspaper/printedition/wednesday/business/ny-liponz0128,0,990246.story
Or think about all the folks that were scammed by Arthur Nadel
http://www.huffingtonpost.com/2009/01/27/arthur-nadel-missing-fund_n_161244.html
↓ Quote | Posted January 27, 2009, 11:29 pm^^Kidding that was me. This is about when I started reading your blog, now that stories out the anticipations over I’m done.
↓ Quote | Posted January 30, 2009, 12:48 pmWhere’d the comment go? you got a filter only post in your own name I guess? I put a comment as Kevin I guess it’s for the best keep your stress level down
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↓ Quote | Posted January 30, 2009, 12:52 pm