It starts off like any other Monday morning. Your up at the usual time, usual routine, coffee, check the news, look at the pre-market movers, check the $SPY, more coffee, then, you start your morning trading routine, of marking up the levels on your charts, and, hopefully, watching the hyper scan, and deciding on your top 2 plays for the day. All good. Then, its time for the pre-market plan of attack, atleast, for tricktrades members it is. This is where Pat
Goes over around 10 plays, from the basket of stocks we trade, and develops a trade plan for the members, based on last nights hyper scan, with any adjustments in accordance to the pre-market movement. ie, gap ups, gap downs, morning news ect. Soooo, your all set, and the world is good. ITS ABOUT TO GET DARK, AND YOU DONT KNOW IT.
So, your all set, trade plan in place, you know what your doing, its now a simple case of waiting for the trade to come to you. I mean, what could possibly go wrong. The market opens, your calm, but also, your a tad distracted. You see, yesterday, you had a credit card bill come in, and you know it needs paying, and so, today, you’ve put a little pressure on yourself to make money. You’ve decided that you’ll size up today, so you make more money. (BIG MISTAKE). The bell rings, the market is open. Your trading $NVDA, thats the one you want. You wait for a few minutes, waiting for the price to come to your entry. Its not coming, your getting impatient already, mouse finger is getting jumpy. That card wont pay its-self. The price is still a little off your level, but you dont want to wait, incase you miss the trade, and so, you get in. Now, your usual size is around 100 shares, depending on risk, obviously, but today, your hitting it with 200, because, you need the money. The problem is, you havent actually considered how much you’ll loose on this trade, if it goes west. you know your stop area, but still, now your trading for money alone, all your risk managment is out of the window. Your in 200 shares, over $1 from support, long. Now, you’ve never risked $200 on a trade before, and all of a sudden, you find yourself down $100 very fast, because, you didn’t wait for the trade. You jumped in, assuming the price was not coming down to you. Now it is, and your long, 200 shares, and suddenly, your not comfortable with the position. Fuck, you suddenly realise its a potential $200 plus loss, shit. $NVDA does indeed come down to your level, where you should now be getting in, on confirmation, however, your under water now by over $230, and sweating. What do i do. Fuck. Its gonna hold, it has to. I’m adding in. get a better price. Yes, then, when it goes back up, i’ll have a big position to make that money i need. So, like an idiot, you add in 100 more shares. Now your in 300, and over 3 times your usual size. Now, the thing is, $NVDA has a lower level, 40 cents down, thats actually a strong daily level. Had you had waited for the correct entry, and used just the 100 share size, you’d be ok giving it to that area, should this level fail, hell, usually, youd prob take a starter here, and see what happens. Add in lower or stop out for a paper cut. not now, shit, your in big, and way out of your depth. 3 times over size, already 4 times over your single trade max loss allowence, and its not looking good. You look at $SPY, shit, it looks like its selling off, key level just broke. You know whats going to happen now, you’ve seen it too many times. $NVDA breaks support. it breaks hard. you look at the pnl, minus $310, what the fuck. What do i do. Shit. Sell Sell Sell. Panic, all logic now gone, you dont look calmly at the chart, you dont look at the $SPY chart, nope, you shit yourself, and hit that panic button. Your out for $320 loss. over 3 times you daily max loss.
FROM THIS POINT ON, EVERY DECISION YOU MAKE, IF YOU CARRY ON TRADING, WILL LEAD YOU CLOSER INTO THE RABBIT HOLE. You sit there, looking at your screen, and wondering how the fuck that happened. Then, you look at $NVDA chart, and realise how stupid you were. Yup, it held support at that level, just 20 cents lower than where you took a purely emotional stop. As did the $SPY. Held next level. Now you just sit there, looking at it bouncing off that level. Its already 60 cents off, and back above your exit. Shit. You fucked up big time. Its going back up, I’ll get back in, make that money back, yes, i will. Fuck it, 300 shares long, this is going back to high of day. I’m in. plus $70, plus $90, yessssssss, get in, i’m holding, i need that $320 back, and then some, if this goes bck to highs, i’ll be up over $300 in the green, happy days. But no, it doesnt often go like that, as we know. $NVDA hits it’s previous low of day support line, and stops. SUPPORT HAS BECOME RESISTANCE. Your up $100 on this trade, but thats no where near enough, and no way are you taking it off here. No way. Sadly, for you, $NVDA rejects hard. and pretty fast. Within 1 minute your back to break even, and getting distressed. Now what. Take it off?? No, lets see what it does. It will hold, and push back up, the chart looks ok. But it doesnt, it goes straight back to the daily level where it came from. You completly panic, now, your in trouble. down another $200, you hit the sell again, not even looking at the chart, now your minus $500. a weeks worth of loss, and you need money. YOUR NOW OFFICIALLY SLIPPING INTO THE RABBIT HOLE. Your head goes into your hands. What has just happened. Why. You cant leave it like this. What will you tell the wife. the husband. whoever. This is a nightmare. You simply have to make that money back. OK. Calm head, (SO YOU THINK). $NFLX looks ok. coming into VWAP. YES, I’ll hit it, this will put me right. VWAP rejections never fail. 150 shares. In, right on wap, all good, but no. The $SPY is rippin and you never thought to look, because all you sere thinking about was money. $NFLX pops, and squeezes, 2 points in 2 candles, OMFG….OMFG….OMFG. You freeze. WHAT THE FUCK DO I DO. I CANT, SIMPLY CANT TAKE ANOTHER LOSS. No, i’m holding, i see a level, just 40 cents higher, that will hold. It will reject there for sure, I may even add in. Nail it. Sure enough, it hits the level, it rejects, 30 cents, you add in, at this point, your completly out of control, your in 200 shares of $NFLX long, your way under water, and now, your refusing to face the reality of the situation. This is the Ostrich phase of the rabbit hole. The phase where you bury the head in the sand, and hope all will be ok. IT WONT BE. From this point on, you are now officially IN THE RABBIT HOLE. THIS ONLY ENDS ONE WAY. 200 shares, down 4 points a share, refusing to sell, convincing yourself it has to come back at some point, right? already down $500 before this trade. FUUUUUCK, thats $1300, what can i do. i’m screwed. You hold on, believing it come back, but it doesn’t, it keep ripping. And ripping. $SPY is ripping. $NFLX has news, but you dont know that. Your simply living on a hope and a prayer now. Praying to a false deity for a miracle that not going to happen. Level after level passes. Its a freight train, and nothing is stopping it. 8 points a share, $1600 on this position alone, and no sign of an end. Your seeing it, but not. your head is spinning, like your drunk, but your not. The eyes glaze over, despair sets in, 10 points a share, – $2000, -$2500 total, and your fucked. You hold on, well, whats to loose. It will come down at some point. Your done. Your aggressive, your semi violent almost. You slam the keyboard, hit the door, headbut the wall, even consider kicking the fucking cat. This is a disaster. You broke every single rule. Sized up, ignored risk, diddnt use levels properly, then, you took a stupid, mid range trade, to nowhere, on an up-trending freight train. Now, 4 hours later, your account is over 1/3 gone. All that work, all those months and months building it, slowly, destroyed. Gone in a morning of sheer and complete and utter madness. Now your decision making abilities are gone, reduced to decisions based purely on very high stress and emotion. So, you decide, in you infinate madness, to swing it. It will come back tomorrow. Profit taking. Has to. And so, thats what you do. You walk away, leave it. After all, its not a loss yet. Not until you cover. You cant tell the other half about this. It will be the end of it for you. Tomorrow it will sell off, and hopefully, youll get out break even. Yes, break even, thats what will happen. 3 glasses of whiskey later, and all is looking better. It closed at HOD, leaving you down almost $3000 on the position. The next day, it runs 6 points before you get the balls to accept the loss. its not stopping. You know its not. Another $2000, thats $5500 gone. you had a $7000 account. Now its gone. Nothing left. And with it, goes your trading. You cant refund, and you have some bills to pay. THATS THE RABBIT HOLE.
So, lets talk about THE RABBIT HOLE. Weve all been there, or, will go there, at some point. Its not a nice place, and its not a nice feeling. It starts with just the one single loss, but, if that loss is a silly one, then, the next trade will sometimes be a revenge trade, of sorts. An I’LL GET YOU BACK TRADE. They usually end red, and leave you feeling angry. Its right here, at this point, that you must recognise whats happening here. As soon as you feel that red mist, that sense of anger, aggression, pent up tensness, that feeling that you wont be beaten, that my friends is when you need to be strong. At this point, your on the precipice of the black hole, and heading for the event horison. TIME TO BE STRONG. TIME TO GET A GRIP.
Heres what i do, or, used to do when i had these problems.Which, trust me, i’ve had my fair share of. As soon as i feel these feelings of anger coming to the surface, due to red trades, as soon as that revenge trade feeling starts to rear its ugly head, i step away from the screens. I close down the broker, the charts, the chat, everything. I shut down the PC completly. Go put on the kettle, make a cup of tea, or coffee, breathe deep, count to 10. Long deep breaths, and open up the front door. Make that cupper, and go outside. If you have a travel mug, make it in that. Go outside. what ever the weather. Go outside, with that drink, and go for a walk. Into the woods, into a field, a park, anywhere. Just get the fuck out and away from the house. Get some fresh air. Clear your head. Think about what you do, why you do it, and, how lucky and fortunate you are to be doing it. Enjoy the fresh air, and enjoy the feeling of beating the rabbit hole. Stay our for a half hour or so, untill your calm, and relaxed. Your not trading again today. OK. Go back home, and do what ever you need to do. Go out, get some dinner, watch that movie, anything. Enjoy this day. Celebrate this day. Because, my friends, this is the day you conqured revenge trading, the day you kicked ass on the rabbit hole. Today, you stood up, showed your a bigger, better person that you were last time this happened. Today, you took one step closer to being a TRADER. A true trader. Not a gambler. Not an out of controll gun slinger. Nope, profesionals dont do that. They remain calm, collected, and composed. It takes time, and alot of self disicpline to achieve those things. One step at a time. Lets master these emotions together, one little step at a time.
I’ve seen many, many people go into that head space, the rabbit hole, and let me tell you, it ends bad. I’ve seen way too many people blow up their accounts because of high emotion, and an inability to control them. For me, the getting out of the house was the key. I’m an out doors kinda person, i love the open, the air, the birds, the trees, the clouds, space, and feeling one with nature, so, for me, thats my church, my place of peace and where i give thanks. So, thats where i go when i need some peace and time to reflect on events. Were all different, so, find your place of peace, and go there when you need to calm down and get your head together.
I personally managed to take this a step further, by seperating the sessions. So, for example, if i had a bad morning, where i lost controll, i would walk away, do all of the above, take the time out, re-focus, then, come back, and turn everything back on. I looked at it as a completly new trading day. What happened before was yesterday. The afternoon session is now a new day. Having 2 accounts helped, as i could use the account that was even on the day. New session, new mind set, new attitude. And, to be honest, it really worked for me. Its how i got right into afternoon trading, and led to the development of the SAVAGE SCANS ATM REVERSAL SCAN. For me, a perfect tool for afternoon trading, perfect , low risk, high reward set ups, and the mindset going into the session was great. I had months and months of amazing afternoon trading, and, to this day, still use the scan, and still love the reversal plays.
At tricktrades, we have a saying that YOUR JUST ONE TRADE AWAY. Dont let this mantra be the wrong thing. Please, please, dont ever blow up or destroy your account because you go down the rabbit hole. Dont ever be one trade away from disaster. Let this mantra be a positive thing, and believe in it. (funny to see so many other so called GURUS copying this. it was Pat mitchell who’s been saying this for as long as ive known him, now its everyone’s mantra.lololol.) So, to expand further, we could look at reasons why we gravitate towards that dark place to begin with. I firmly believe that, if we go into the day with the right mindset, with a sense of calm, wellbeing, and equilibrium, then, the battle is half won. Dont trade after a row/domestic fight. dont trade after a bad experiance with someone, after roadrage, after bad news through the letter box, after a shitty phonecall, after a big bill lands on the doorstep. On those days, just take it easy. Those are the days that will un-settle you, de-stabalise your mindset. On these days, untill your 100% in controll of your own attitude and inner emotion, take the day off. do important jobs. Dont trade. Dont put yourself into that position. You need to go into a trading session calm, relaxed, at one with both yourself, and with life around you. Listen to some music that calms you, do some breathing excercises, try some light meditation, take up Yoga, or pilates, excercise, eat well, eat clean food, drink lots of water, make sure you take a shower before you trade, feel clean, tidy and ready to go to work. This is your business, and, although we dont need to dress smart, we do need to feel smart, and ready. Perfect planning and proper preperation prevents piss poor performance. Give yourself the best possible chance every day, by following a good routine, and try your best to stay fit and healthy. YOU ARE ONE TRADE AWAY. YOU DON’T REALISE IT. ONE TRADE AWAY FROM LEVELING UP, FROM THAT TRUE BELIEF, FROM REALISING THAT YOUR ACTUALLY GOING TO MAKE IT, BECOME A TRADER. FROM GAINING THE CONFIDENCE THAT WILL DRIVE YOU INTO THE NEXT CHAPTER OF YOUR LIFE. DON’T BE BEATEN AND DESTROYED BY YOURSELF. TAKE CONTROLL TODAY, AND TAKE LIFE BY THE BALLS AND GET FROM IT WHAT YOU WANT. IT’S YOURS TO LIVE, OR TO WASTE. MAKE YOUR DECISION, AND FUCKING DO IT.
Thanks for reading, i hope it helps a few. Safe trading.
Bye for now.
16 thoughts on “THE RABBIT HOLE.”
Great Blog Kelvo, Your timing is perfect, I needed this today after the week I had. It’s amazing that I’ve been thinking about this exact thing this morning. I’ve come to realize that I trade best when I’m feeling calm, and at peace with my self, it’s then that the trades appear in front of you. Thanks, My Friend!!!!
Great blog, K
Kelvo that’s great happens to all of us that actually trade
Everyone hates to admit that they made a mistake or have losed. What you described there about the Rabbit Hole was the perfect example of the day that led me to blow up account. And there have been several. But using Tricktrades teachings on taking less trades but holding longer winners is changing all that. I am thinking about printing your blog and posting on the wall as a mantra or a reminder of how not to fuck up. Thanx Kelvo for sharing
WOW! Kelvo, You have hit the nail on the head again. I went down a short rabbit hole this week as well. Changed my routine enough to leave me vulnerable. Thank you so much for sharing this, it helps more than you will ever know. Every time I need something to get me over a hump, or headed in the right direction, you and Pat are right on time with the perfect things to say. I am extremely honored and grateful to be taught by two of the best Traders today. Y’all cover all aspects of trading, not just trades. Thanks for all that you do, God bless!
This describes exactly what happened to me last year. This year is totally different Thanks to TT. I am far more patient and disciplined thanks to all the great teachings of Pat and Kelvo. It is engrained in my trading that I need to “Get the Fuck” out if the trade is not going the way I planned. It has saved me a couple times from the rabbit hole.
Really love these blogs.
Hey K, excellent blog and what a lesson. I recently went down the rabbit hole, not to the degree you described, but down a rabbit hole none the less. I told Pat what I did, I blew my daily max loss out of the water. I revenge traded as I didn’t want to accept the loss and damit I wanted short but the market wanted long. A lesson, I hope, learned. A promise made.
Hey K, excellent blog thanks for this. I recently went down a rabbit hole, not the same extent as you described. I blew my daily max loss out of the water. I didn’t want to accept the loss on a trade and then revenge traded myself deeper and deeper. I wanted short and the market wanted long. Told Pat what I did, how ridiculous I was and vowed not to do this again. Lesson learned I hope.
Man my heart was beating reading through that scenario.. thanks for the precautionary take and inspiring message at the end!
Kelvo, I had not read this before our Shotgun Session, but now I know you’ve been looking over my shoulder. Been there (the Rabbit Hole), and you’ve described it perfectly. Must mean you’ve really been there. It’s an ugly place to be. Thanks for being so open about it while sharing your thoughts. Great advice. Thanks.
That was painful to read only because I have done it many times. Great job Kelvo!!
Great work, Kelvo! Really well done. Thank you!
Extremely well written Kelvo!! You described a scenario that no trader ever wants to experience, and therefore educating and cautioning those who have never been down the rabbit hole before. EVERY trader needs to read this! Thank you so much for your knowledge and wisdom.
Wholly sh*T!!!! How did you get hold of my trading journal……… ; )
I have recorded this travesty too often in my journal and I know the feeling of being trapped in that emotional spiral far too often.
Consequently, I have now spent a great deal of time readying and studying psychology books and adopting emotional disruption techniques, which have helped a great deal.
Great article Kelvo, a true reflection of the grind all aspiring traders have to endure.
KELVO, don’t want to sound like a suck ass. YOUR EFFORTS AND YOUR CARING AT TRICKTRADES ARE PHENOMENAL. It’s great to have you around for your expertise. Your POSTS IN CHAT have helped me incredibly. KEEP KICKIN BRO.
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