In today’s episode, we discuss how to bounce back after blowing your trading account!
Because let’s face it, blown accounts are sort of considered an “initiation” if you plan on sticking around this industry for any amount of time.
In fact, we don’t personally know of any traders that have reached a level of consistent profitability that haven’t blown an account (if not many accounts) on their path towards profit.
This is a very common stop on the journey towards becoming a consistently profitable trader and how you decide to proceed once you’ve blown your account will determine your future success or failure in this industry.“If you're gonna have one of these blowout moments, do it when it's cheap..and it's cheap when you're first starting out when your account is the lowest it's going to be” Click To Tweet
If you blew your account and did not learn anything from it, then wiring some more funds to your broker and topping it back up will likely lead to the same disastrous result.
So if you find yourself in this position, fear not!
We’ve got your back here at TRADEPRO Academy so we’ve put together a structured, 5-step process that you can follow in order to put yourself in the best position to recover your account and take it to new equity highs!
So what exactly is the process?
STEP 1 – Accept your responsibility for the losses
STEP 2 – Analyze your results (losses)
STEP 3 – Make a plan
STEP 4 – Take action
STEP 5 – Absorb like a sponge
It looks easy on paper, however, many people live their lives in effect meaning that they tend to blame external factors for failures as opposed to taking responsibility for their circumstances.
This makes accepting responsibility for the realized losses extremely difficult. Most don’t ever get past this stage and will throw blame towards the markets and even their brokers for the losses in their account.
Without accepting responsibility for your current situation, the chances of you making a lasting change greatly decrease.
If you can commit to living at cause and accepting responsibility, then the next step is analyzing your results and looking for strengths and weaknesses in this data. If you are not already keeping a trading journal and recording your trading activity, then we suggest starting immediately! You CANNOT grow as a trader unless you have data to review! At this point in the process, you will want to identify whether the machine (trading strategy) or the operator (you as a trader) is broken.
Once you do this, the next step is pretty simple. It’s time to build out a trading plan! A trading plan is extremely important because it will be your operation manual for trading the markets. Without a trading plan, you are essentially gambling, so if you want to treat this like a business you’ve gotta do the heavy lifting here. If you are not sure what a trading plan is or how to make one, see the resources below for a link to our Youtube Series on this topic!
So you’ve spent some time putting together a trading plan, now what? It’s time to take action! Spend some time in a simulated environment testing out the strategy for a week or two with success before transitioning to the micro contracts to get some skin in the game while testing out the strategy in a live setting. Once you rebuild your confidence and get comfortable getting paid, then you can scale back into the mini’s and work from there.
What’s the final step in the process to recover your blown account? Joining a community of successful traders and becoming a sponge. Look for things other traders are doing that you may not be! You will always be a student of the markets trying to constantly refine your trading edge in these markets and there is no better way to do this than to be part of a community of real traders.
In This Episode You Will Learn
- George’s experience with his first blown futures account and how he bounced back 6:50
- Mark’s experience with blown accounts and lessons from the bounce back 8.25
- Why accepting your losses is so important for moving forward 14:25
- The two types of categories that are causing you losses 22:45
- Why you need a trading plan for a chance at success in the markets 30:00
- How to put this whole 5-step process into action 35:00
- Why joining a community of successful traders can accelerate your development 44:40
Some Questions We Discuss
- Why accepting responsibility for your losses helps empower you to make a change? 16:45
- Why the majority of traders have a difficult time analyzing their losses? 22:05
- What are you planning to achieve without a trading plan? 33:10
- What to ask yourself before every trade in order to mitigate emotionally trading? 36:15
- Why it’s important to take trades that you are proud of? 40:00
- If you’re trading against someone, doesn’t it make sense to trade with someone? 48:30
- Connect with our community online: Trade Pro Academy
- Catch up with our earlier episodes: Mind Over Markets Podcast
- Check out our Youtube: Trading Plan Series