Today, I’m trying to recall the worst episode of fear I’ve experienced trading.

It was in August, 2004. I blame a certain newsletter for it. The writer had built up a frightening picture of how the US economy entirely depended on the Japanese PM’s good will for it to continue.  I forget exactly why. But the short of it  was that one day the old man would roll out of bed and decide to pull the plug on us, the writer said. He painted an apocalyptic picture of the day. Unemployment lines, factories shuttered, houses boarded up, foreclosures, stock markets crashing, the dollar worthless, oil prices so high no one could drive any more….

When the market plunged that fall, I thought the moment had come. Everything was down – my pension, some etf’s, long-term positions, short-term plays. I had put a lot into some tech stocks (Juniper, Nvidia, Foundry, Nortel – yes, those – remember? –  all of them), because I thought they were due to go back up. And in the beginning of that year they started out promisingly. But then an upswing… that didn’t turned into a downswing… that did. 

And kept on swinging down, lower and lower. I stopped looking at my positions. I was sea-sick every morning. Literally.

Which was stupid because there were several times the swings went up and I could have sold out for a smaller loss than I feared.

I didn’t. I was simply unable to face what was happening. The market wasn’t going back up. It was going lower. And I didn’t want to see that. I couldn’t bear feeling that bad. By not looking at the numbers, I didn’t have to feel the loss, so I didn’t. I procrastinated. I wanted to wake up one morning and see the numbers up in black as though they’d never been down.  And I wanted to sell at a profit. A plus, however small.

I waited so I could exit without any loss. Wanting the perfect exit, I missed all the good ones. Then even the decent ones. When I exited finally, in August, it was at what turned out to be the very bottom. After that, there was a three-year uptrend.

But I wasn’t on it.

I was in shock for months after seeing the ticker plunge for the last time and jumping out. In shock from having sold everything – the bad, the not-so-bad and the hardly-bad-at-all.  I didn’t want any more of it. I didn’t want to have my stomach churning every morning. I didn’t want the the false hopes of paper profits that disappeared before you took them and the constant drain of paper losses that drew blood because you couldn’t hold on any more.

I thought about how hard I’d worked to save the money. It wasn’t ‘easy come’ at all. But it was easy go, alright.  I thought about how I’d scrimped on food, weighing things for a difference in a few cents, skipping a meal to save a few dollars. I thought about how I’d done without things I needed so I could pay back my debts. How I’d been hard, not just on myself but on my family.

I’d curl up on my bed, a kind of silent whimpering inside me. I cursed myself and blamed myself for being greedy… for being in the market at all. How could I be so stupid.  Trading was for cleverer people than me. It was for people who had money to throw around, not for people who’d always had to be careful.  But inside I knew it wasn’t greed at all. I’d never been a greedy person. Fear was my problem. And habit. The habit of not ever thinking about something so tedious as money.

If the bank had paid even 1% more than inflation I’d have left my money in it and forgotten I had it. But it wasn’t. And it hadn’t for a long time.

So it was fear, not greed. Fear that I’d never be able to keep up with things costing more and more. Fear of always struggling and getting less and less. Money in a savings account was like a continuous leak, a bleed you couldn’t staunch. Houses had tripled where I lived. I might just as well not have worked for the past three years. I told myself, I should’ve been a bum. I ought to have gone into flipping them myself, like the people next door.  I didn’t. I thought it was wrong to. And now who was the fool? Just trying to make enough to keep up, I’d lost everything I’d made in three years. And all the interest from the ten years before.

A loss that large isn’t something you cry about. It stays somewhere in the background of your mind like the distant shrieking of a gull or the beating of waves in a seaside town.  You’re never really far from it.  It’s something that’s always going to be there, from now on.  Like a scar from an accident. In one moment you become someone else. Some one else who’ll always have this rip across your face, this twisted leg, the odd droop to your mouth. You forget how it used to be before the accident.

That first big loss is like that. The feeling you had before it goes forever.

The feeling of being whole. Of doing well. After that, there’s a kind of a gash. A sense of being on the wrong side of things.  Of being a loser. A kind of raggedness.

For a year I couldn’t press a sell or buy order on my screen without second-guessing it dozens of times. It took me two years before I could buy anything without wanting to jump out immediately…..

Only after a long while I began to understand, really understand, that trading isn’t about money. Even money isn’t about money.

It’s about emotions.  And success at trading is about understanding your emotions and being able to handle them.

You don’t overcome them but you know what they are. And what they’re making you do.

There’s no place for self-deception if you want to stop losing money trading.