I recently read a stat that there are currently 20 million inactive blogs on the internet, which someone has started and somewhere along the line didn't bother to continue to post to. Now I don't know where that number comes from, but the idea of starting a blog and giving up on it somehow gave me the feeling of admitting defeat and that is certainly NOT my intention.
If anything I have learned much from this huge drawdown and as a result want to put the lessons learned out there so that others can avoid it......... although as a word of warning, I must say that I've read many books, blogs, and trader strategies and they all warn to cut losses immediately and before they become big, so reading may not do any good.... the best way to learn is to experience it and let it leave a scar - that way you never forget.
For all who followed by blog until June of 2010, know that I used to post all my trades as well as the occasional educational piece on trading. I made a trade in June and shorted many contracts of BIDU Call options and this spelled disaster for my account. I did not cut my losses and it grew.... and fast!!! It took me a while to sort it all out and for all to see I will post my trading account equity line for 2010, measured monthly.
The losses from the BIDU trade put a huge damper on my account, and at its peak caused a 32% drawdown.... which was unacceptable because it was caused by a single trade.
After I closed the trade at an enormous loss and with much psychological pains I stopped trading for 3 months until I sorted through the emotions. Afterwards I came back to the table with a clear mind and started to build my account up again.... and by October of 2010 the account was profitable again and it ended the year with a 7% annual gain.
In my next posts I will talk more about the process and the lessons learned.... There will be some changes to the style of the blog, BUT I am back and will be posting again so stay tuned.
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