You are never too old to learn new lessons in this business. And, as you become more experienced, the tests continue to be thrown at you. Repeatedly, until you master them.
Lately, one client was enjoying his plan of targeting $200 a day profit. After a while, he upped his target to $300 as his account balance grew. In fact, he was doing very well, usually raking in $4-500 a day. Today, he was up over $500 but instead of stopping, he chose to enter yet another trade. Pure greed.
The trade turned on him and his stress shot up as he spent most of the day watching his elusive put options whittle down. He did recover somewhat by the end of the day, still recording an overall daily gain of $70, which seemed to make him happy. The trouble is, he was up over $500 earlier this morning.
Had he called it a day at 10:00 am, he would have made enough to put food on the table for the week AND fill his car with gas. But no, greed got in the way. The lure was just too much.
This is something that must be consciously monitored. Left to its own devices, these emotions of greed and FOMO will creep back into even the most experienced trader. You can only lose when they take over. At all costs, when you hit your target, stop trading. Go do something else. If you insist, fall back into paper trading.
We’ve all done it but to turn the corner on your success, it is time to recognize the enemy: the man in the mirror. Wrestle down those demons and just say no! You do NOT need to be in a trade at every turn.
Hopefully, today’s near loss will resonate with my client and he will remember the pain, should his greed rear its ugly face again.
Head Trader, DayTradeSPY