ForexSpirit

My first post of the new year is going to be of the slightly grisly kind. I am going to break down some of the figures that come from my trading results during December 2007.

If you read my blog last month you’ll know that I completely lost control of my trading situation and basically imploded my trading account.

Hopefully I’ll be able to focus on more positive, forward looking topics soon but I have posted a monthly review of my performance each and every month on this blog and I think it is important that I do so as usual. It sort of marks the end of one stage of my trading career and the start of another. After such a traumatic event nothing can ever be the same again.

I closed out 25 entries during December. Only eight of these entries were closed out in positive territory. Fully 14 of those entries were fatefully closed out when I threw in the towel on my positions on December 19.

My account return for the month was -79.09%. To get the true impact of my disastrous December this is what my account equity for the whole of last year looks like on a graph:

The simplified, short hand version is that I was overleveraged and did not handle my losses well at all.

There were many minor errors and mistakes in the prior weeks that culminated in this undesirable result. My trading had become ragged. I needed a break from trading to recharge my batteries but didn’t do so. I didn’t avail myself of the opportunity to extradite myself from the situation when I had the chance. I was pushing myself too hard. I was becoming impatient. I didn’t follow my gut. I didn’t step back and see the bigger picture often enough.

Obviously I want to try and make sure that I don’t make the same mistakes again going forward.

It’s pretty easy to quantify the ways in which this experience has not been pleasant at all. Losing money is never nice. Losing lots of money is even worse. Having to tell your spouse exactly how much money you’ve just lost is something I don’t ever want to have to do again. Especially when future use of that money was linked to potentially moving house or your child’s education.

You doubt if you have what it takes to be a successful trader. Your confidence takes a severe blow.

On the other hand there a few positives that can be taken from the situation. In a way I have the opportunity to completely reboot my trading approach. I can step back and examine my whole trading plan. I can pick over two years worth of trading results to try and determine what things worked well for me and what were my weaknesses.

I am currently putting in place tweaks to my trading plan, mainly on the money management side. The plan for the immediate future is to lock in these changes and to slowly start building back up my confidence by getting back into the market.