I am broke

//I am broke

When I published “I am rich” some months back I was jokingly thinking whether one day I’d have to write a piece titled “I am broke”. I never seriously considered it would actually happen though, much less within such a short time.

But yeah, it did, almost, at least. It was a close call. Very close. Way too close! I nearly got wiped out, like, completely and utterly wiped out. Broken. Bankrupt.
It happened 5 months ago. At that time, I didn’t talk about it, those few that did know of “the incident” had no idea of the actual extent, I played it down a good notch.
I had to. It was part of my survival strategy.
While today most of these weeks aren’t much more than a blur to me now, I still remember crystal clear the moments after the final losing trade hit me with all its vengeance.

It was early in the morning, around 4am, cold, dark, grey and rainy.

I was tired. So. fucking. tired.

The 10 days before I hardly slept a night without interruption, my price alarm clock woke me several times, alerting me of an ever-growing pile of shit I had to attend to. Looking back, I am not even sure why I even bothered to get up. I mean, not that I did do shit anyway, I was merely watching, paralyzed and without so much more than hope, that things would turn around. Pretty, pretty, please.

Well, yeah, they didn’t.

For a split second I almost felt relieved when my position was liquidated. That’s it, I thought. It is over now. Then panic set in. I looked out of the window of my fancy rooftop apartment in the most expensive part of the city and contemplated my options. Not going to lie, the first thing that sprung into my mind was to jump out of the window, lol. Yeah it is actually not funny, I know. Especially because it is true.

I felt hopeless. I mean, don’t get me wrong, as I’ve often said before, money isn’t all that important to me. However, due to my rather adventurous (I prefer that over chaotic 😉) life during the last 2 years, with breakups, several moves, trips and whatnot, I grew used to the comfort it can provide. Of course, I did, who wouldn’t, money is a fickle bitch! It was pretty much the only constant in my life.

So, while I was looking out into the depressing November rain, I suddenly realized how this was a make or break moment. Here and now, my fate will be determined, I had to choose carefully, for, the next step is either going to get me back on track, or push me down into an abyss, perhaps deep enough to get lost for a loooong time (I refuse to believe that I can’t dig myself out of any hole, eventually).

At that point I wasn’t thinking of killing myself anymore, like, that was only my initial reaction, which was quickly eclipsed by my overwhelming love for life.
The make or break moment was more about my mindset. To be successful as a trader (or, in life, really), your mindset is EVERYTHING. Trading is a psychological game, a game of chicken of sorts. You need to be confident, you need to be able to make quick decisions, to trust your judgement and plan, to be comfortable enough to go against the grain/masses.

I was all that when I started and subsequently had a great run. After years of following the markets, their fundamentals/technicalities were relatively familiar to me, so I just read a couple of books about trading psychology and technical analysis and JUMPED right in.

I did trade before already but was more of an investor/swing trader and I always only used my own money. Going forward, I was determined to start margin trading, which is basically borrowing money to trade bigger positions, to – you guessed it – make even more money. My plan was to scalp the market and swing trade to fund my increasingly lavish lifestyle with single digit percentage moves (ok, I am half joking here, but then again, only half. Lifestyle creep is real).

Using leverage is risky because while you’ll likely won’t end up in dept, the leverage you use determines how quickly you will be liquidated if the market moves against you. For example, using 100x leverage, a 50k trading stack allows you to enter a 5 Million position, but then it’d only take a one percent move against you to lose everything. Ah and by the way, that’d be called gambling, not trading. I’ve never used 100 leverage but at the height of my incident” I came close to 50x. Just for the record, leverage isn’t bad per se, it is just a tool, which can be used sensibly, eg, to reduce counter-party risk with money on exchanges/brokerage accounts… At the end of the day, all that matters is that your position size matches your risk profile. 

Anyway, I will spare you these rather boring details.

All that matters is that I made a shit-ton of money. It was unreal. I had a great intuition for what the market will do next, I had plans in case I was wrong, and most importantly I was bold enough to risk my money, again and again and again, day after day, week after week. Honestly, it was a great feeling to be right and to be with spades of cash. I made close to 6 figures every month, sometimes a week.

I am not an idiot (at least so I thought, looking back I am not so sure anymore), so I had safety measures in place. I was withdrawing my earnings immediately, never increased my trading stack and overall tried to keep a level head. It worked. For a while. With each trade I grew more confident, less humble and cautious, and got closer to my downfall, which was just looming around the corner.

To make things worse, I also became increasingly indifferent to the ridiculous sums of money I was juggling with. I slept like a baby, despite sometimes nursing heavily underwater multiple-Million Dollar positions.

To keep a long story short, and finally get to the point of this write-up: After another particularly successful trade (I was going against what felt like the whole world and held an underwater position for several days and nights, which eventually made me 300 percent), I felt invincible. Nothing could ever stop me, for god’s sake.

Enter the mistake

Instead of closing the position I fat-fingered and mistakenly left a small portion of it open. I only realized the next day. The market moved against me, I was underwater but only a small amount. Even though I had planned to take an urgently needed break after the win the day before, I didn’t want to eat the loss, which wasn’t all that much at that time still, not even 5 figures.

I don’t have to, I thought. I will just endure it, power though, add to it, turn this around and make this a fucking winner toooo. Let’s go, you got this. You can do this.

Not sure it was because at that point I was mentally exhausted, way above my head or just plain stupid, but over the next 10 days I was unable to objectively assess the situation and deal with it in a proper manner, despite having watched and read about others doing the exact same mistake and losing everything in the process.

Rather I preferred to ignore facts in favor of hopes and wishes. The loss grew bigger and so did my ignorance and willingness to exit the god damn trade. I abandoned all my rules and started adding to my dwindling account. There must be a reversal, there has to be.

How it often goes, during that time the market did several unprecedentedly violent moves and I got liquidated 2 times. I am not complaining, I take full responsibility, the inherently erratic/ unpredictable nature of financial markets, especially that market wasn’t exactly a secret.

These moves happened mostly in the middle of the night. Torn out of bed. Heart beating up my chest. Panic. Fear. Disbelief. Acceptance. Continuation of my ignorant ways.

All in all I had to go down to my last bit of money before I realized the gravity of the situation I got myself in. I could continue trying to be right and keep my eyes closed from what was rapidly unfolding anyway, and likely lose all my capital and apply for jobs the next day, or I could finally face reality and deal with it.

Thankfully, I chose the latter, but it was difficult. All of a sudden, I wasn’t wealthy anymore. Going from “I have and can make unlimited money” to “I’ll survive the next 6 months, even if I’ll likely have to make some major cuts” wasn’t easy.

I once read about coping mechanisms in face of adversaries. Basically, what you do is changing the time-frame you think about. When all is well, you might enjoy thinking/ planning far ahead into the future, dwelling in whatever you imagine your life to be.

But life is unpredictable, and tough times are testament and reminder for that, igniting/instilling fear of what might happen next. When you’ve just lost your job you won’t be cheerfully thinking about your retirement, rather you’d have anxiety for what will be.

Sometimes, when things are very bad, the only time-frame you can muster thinking about, the time you’ll try to make it through, to survive, pretty much, might only be a month, a week, a day, an hour, or in very dire moments such as during panic attacks, only a minute.

So, I immediately pushed aside any thoughts about my future and focused on how to make it through the month.

First thing I did was to stop throwing good money at bad, which I should have never started in the first place (it is, like, one of the number one rules lol). I decided to take a break, reconsider my strategy, my sanity, and hack out a plan to get me out of this mess.

After walking around in the woods for a couple of hours and riding my bike like a maniac, all while contemplating everything, I decided without a shred doubt that I would keep on trading. I liked it, I was good at it.

I just had to become better, to dissect my mistakes, use them to grow. The obstacle becomes the path, kind of thing. I knew from previous losses that it will take a great deal of effort to keep or rather rebuild my positive headspace, which was paramount to even think about trading again.

The plan was simple, I’ll just to what I always do, at that point I would call it my way of life, really.

I am talking about brainwashing myself. Forcing my full focus on the positive, not allowing any negativity to creep in. Normally I do that well, but during that particular time, it was hard.

Near constant thought-loops.

Why did I do this, I didn’t even need more money and now I almost got none. How can I get it back as fast as possible, how can I pretend all that never happened, god fucking damn it I am such an idiot, I thought I am better than that blablablabla.

It is hard to silence that voice again and again and again. It was for that reason I didn’t tell anyone, I couldn’t allow any more bad vibes to enter my sphere. And they would have, I mean, I was quite objectively in a very bad situation, there was no sugar coating it.

I somehow had to dream and think big again, despite having been stomped into the ground, barely seeing the light of day anymore.

But then again, I’ve made it that far, I could do it again. Anything is possible, anything is possible, repeat after me, anything. is. possible. Be smart, be mindful, be motivated, be patient, be angry if you will, just don’t be afraid. Don’t be afraid, in life there is nothing to be afraid of.

That was pretty much what I repeated over and over in my head any time negative would show its ugly face.
Something else I do is to detail/imagine/picture the worst that can happen and then accept it as a possible outcome. Then I push it aside. But any time fear and doubts start to creep up I can think back of my worst-case plan, without dwelling on it of course, but just be assured that I have already appropriately dealt with even the most grim scenario. What will be, will be.

So, what if I have to work again for someone else, I mean, it’s not even been 2 years that I did night-shifts and whatnot for pocket-change. Life was just as good back then.

The following days I went through all trades I did in meticulous detail, and I was shocked at how reckless I was, how dumb. No surprise the market punished me, I really deserved it. But I also realized that most of my trades where spot on otherwise, I just had to optimize exit and entries and most importantly, religiously stick to my plan.

It could work, no, it WILL work, let’s do this.

I gave myself the space to take a break as long as I needed. I had enough spare cash to survive the next couple of months, so there was no rush. Let the trade come to you.

After a week I tip-toed into the market again. I started with much smaller positions, limited risk to less than 1 percent of my trading stack. It was frustrating in a way, to make hundreds when you’ve just lost hundred-thousands. But I didn’t think too much about it, and focused on other things in my life, all while executing trade after trade after trade. Within a month I had my mojo back. I slowly increased the position size. Because I was planning exits and entries much better, I was quickly making very healthy profits, even compared to my over-leveraged gambling the weeks before.

Starting the new year, I felt awesome, there was a certain calmness in me. Everything could have been much worse, I mean, I had to crash and burn, obviously I am not a unicorn and most successful traders lost significant portion of their wealth, if not all, at one point in their career. Extraordinary returns always come with extraordinary risk. It was bound to happen and, still, here I was, back on track. I’ve paid a high price but in the end it was worth it. Trust me I’ll never forget how I felt when all went to shit. These scars did and will continue to serve me well to do better and never stop working on myself.

My newly found confidence was exhilarating. Not the trading, not the winning, just the fact that – not even 2 months after having been shattered and beaten down – I was reborn again. Just like that. Much stronger and better.

I mostly kept to myself and used all my energy and focus on trading, but without too much pressure, in fact, I was lying on the beach most of the time, looking at charts etc, but on the beach, nonetheless.

Now, 6 months after |the incident| I made everything back. I know it is hard to believe I almost don’t. It was never my goal to do that within such a short time. I had to run the number several times. Despite trading smaller sizes, despite risking less, or rather probably because of that, as it has made closing losing trades and letting winners run psychologically much easier.

I am sharing this because I want people to know that life is hardly ever smooth sailing, there’s always surprises, challenges, even catastrophes just looming around the corner. We just have to embrace them as part of life, we have to use them to push forward on our path. Embrace the fear, the panic, the despair.

Embrace it and take action.

Doing so we take their power, we severely limit the negative consequences such events can have in our life. Because it is hardly ever the incident itself that will break you, but rather the fact that you’ve been letting yourself become paralyzed by it.

Don’t.

Look ahead, proud, strong and prepared, and go and smash whatever goal you set yourself. Just remember to dream big enough, for most of us, being fearful roots deep into our soul and severely limits our imagination, and henceforth out lives.

PS. I promise the next article about money will be either when I’ve become a multi-millionaire, or I am legit broke. Whatever the fuck it will be, I am ready, bitch.

2019-03-22T05:23:18+00:00Categories: Articles|Tags: , , , |

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