Have you ever gone “all in” with your trading because you were in so deep you couldn’t see a way out?
This particular question takes me back to a monumental event that happened in 1992 to my good friend, Jack. It was the sixteenth of September, 1992, within an event called the “Black Wednesday”.
That fateful day, I had been trading, When George Soros appeared. George Soros, also known as “The Man Who made Bank of England Broke” gathered large profits approximately $1B from short-selling US$10 billion worth of pounds sterling. This move, along with the decision produced by Norman Lamont, then Chancellor, to raise interest rates thinking they can still save the market from falling caused the crash of the Pound Sterling.
Amid all this chaos, I could see my friend, Jack. He looked puzzled, fidgety and was covered in sweat. He contacted me and asked how the markets would behave. But I told him I had no idea and that I had been just as clueless.
Jack informed me that he was having a loss of $200k despite only having a $100k account… Think about the stress he was under!
Struggling to get an answer from me, he then chuckled and said, “Trade to Rio”. Clueless to what he was saying, I actually went on with my day.
Now, I understand “Trade to Rio” means trading everything you’ve obtained, and when you lose, you will leave everything behind and fly to Rio de Janeiro. You won’t be in charge of your losses, as it will eventually become someone else’s burden.
Simply put, it is like running away from your duties as a trader.
The hours traveled by, and then eventually, the pits had to close for the day. It was a truly crazy and exhausting day for everybody in the trading floor! As we were discussing how our times went, I could see Jack again. This time, he seemed far more relieved and more happy. I then asked, “How it went on? ”, along with a smirk he signaled that he was up by 300k!
He hit the jackpot! Jack didn’t have to travel to Rio! Thinking he can get lucky every time, he went on Forex trading with this “Go Big or Go Home” mindset.
Although it seemed exciting, acting such as this in the current Forex markets will finally doom your trading accounts.
Winning and losing trades is the nature of the things we do, but holding on to losing trades as a result of emotional ties will destroy your account in the end.
Fast forward to a few years later, Jack soon got trapped with his trading attitude, and lost the lot. His wife left him, he lost his house, he lost everything.
Jack has become an Uber driver in local London. And while I possess nothing against Uber drivers, I’m certain that this is not the long run he imagined himself having.
As a takeaway, cut your losses whenever a chance arises. Don’t keep on to a trade and don’t let your emotions get the best of you. Avoid being like Jack.