Have you ever gone “all in” with your trading because you were in so deep you couldn’t see a way out?
This takes me back to a monumental event that happened in 1992 to my then close friend, Trevor. It was the 16th of September, 1992, in an event called the “Black Wednesday”.
That fateful Wednesday, I was trading in the Sterling Interest Rate pits, When George Soros appeared. George Soros, also known as “The Man Who Broke Bank of England” amassed large profits (approximately $1B) from short-selling US$10 billion worth of pounds sterling. This move, along with the decision made by Norman Lamont, then Chancellor, to raise interest rates (thinking they could still save the markets from falling) caused the crash of the Pound Sterling.
Amid all this chaos, I saw my colleague, Trevor. He looked confused, fidgety and was covered in sweat. He approached me and asked how the markets would react. But I told him I had no idea and that I was just as clueless.
Trevor told me that he was holding a loss of $150k despite only having a $50k account… Imagine the stress he was under!
Unable to get an answer from me, he then chuckled and said, “Trade to Rio”. Clueless to what he was saying, I went on with my day.
Now, I understand “Trade to Rio” means trading everything you’ve got, and when you lose, you will leave everything behind and fly to Rio de Janeiro. You won’t be accountable for your losses, as it will become someone else’s burden.
Simply put, it’s like running away from your responsibilities as a trader.
The hours flew by, and then eventually, the pits had to close for the day. It was a truly crazy and exhausting day for everyone in the trading floor! As we were discussing how our days went, I saw Trevor again. This time, he looked a lot more relieved and happier. I then asked, “How it went on?”, and with a smirk he signaled that he was up by 250k!
He hit the jackpot! He didn’t have to fly to Rio de Janeiro! Thinking he can get lucky every time, he went on trading with this “Go Big or Go Home” attitude.
While it seemed exciting, behaving like this in the current Forex markets will ultimately doom your trading account.
Winning and losing trades is the nature of what we do, but holding on to losing trades because of the emotional ties will kill your account in the end. Just refer to my video about Law of Large Numbers to know more.
Fast forward to a few years later, Trevor soon got caught out with his trading attitude, and he lost the lot. His wife left him, he lost his house, he lost everything.
Trevor is now an Uber driver in his local London. And while I have nothing against Uber drivers, I’m certain that this is not the future he imagined himself having.
As a takeaway, cut your losses whenever a chance arises. Don’t hold on to a trade and don’t let your emotions get the best of you. Avoid being like Trevor. Never make that one trade to make or break you.
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