Catastrophic Loss (Part 1)

I do not feel like I have managed this correction very well and I want to spend some time reflecting on it.

For me, “catastrophic loss” is losing much more in a single month (or less) than I usually make in a profitable month. Unfortunately in my seven-year trading career, I have experienced this 4-5 times. Every time I hope it never happens again. Every time I vow to improve.

Before I explore the dark side, I need to fill in context with some details about the upside. My trading business is profitable after seven years. I am immensely grateful to have been able to leave my corporate job and work for myself largely on my own schedule. People often say this is their dream and I am living it.

The way I trade, I make money most of the time. When things are going well, my business is boring. Sometimes this actually drives me stir-crazy! I won’t take up much space dissecting the ridiculous irony of that statement but it will suffice to say I’ve lost any rights to sympathy from others. If anything, this adds pressure to succeed and hopefully that will serve as positive motivation rather than suffocating burden.

The “stir-crazy” nature of my business is one reason I spend time here. While I maintain the blog to keep myself on-track with projects, to organize my thoughts about the financial industry, and to keep myself sharp by practicing writing skills, let’s be frank: I also do it to pass the time! Maybe I also do it to give my carpal tunnel a break from backtesting too much but that’s a separate medical discussion.

Despite the positives, it behooves any good businessperson to keep an eye out for potential threats and for me, the biggest potential threat is catastrophic loss. I will continue with this in the next post.