What do you know about yourself? You are, on the one hand, the most complex thing in the entire universe, and on the other, someone who can’t even set the clock on your microwave. Don’t over-estimate your self-knowledge.
Every winning trade, winning day, winning week, or winning month can just as easily be met with a losing streak of equal or greater magnitude. And the likelihood of it happening is extremely high unless very aggressive risk management techniques are employed.
All too often in my career, when I needed that risk management focus the most, I was least prepared to give it. Why? Because I had just come off a big win and I was riding that high of self-assuredness, elation, and confidence that the continued winning was just beginning. I’m on the other side of the mountain, it’ll be downhill and easy coasting from here.
I’ve been there. Too many times.
My challenge is to better manage the peaks and valleys of my emotions as they ride my equity curve. When I feel like I’m on top of the world, I have to remember that the next drawdown is only one trade away. What am I doing now to ensure I can protect these profits going forward? On the flip side, following a drawdown (whether in depth or time), I have to believe that my process will soon put me back on the winning side. It’s inevitable. So keep my chin up, follow the plan, forge ahead thoughtfully and carefully. It will get better.
And at the end of the day, I have to remember that I’m no goddamned genius. Just because I’ve been doing this a long time doesn’t make me special. Experience doesn’t ensure success. It just means I’ve seen a lot, experienced a lot, and made enough mistakes to fill a library. I’m still human.
And yes… I still have no friggin’ clue how to set the clocks on my microwave, stove, and car dashboard.