I want to share something for the newer traders in the game. I went through a time period in my career (will remain anonymous for legal purposes) when I was on absolute fire as a trader. I was returning a really good amount and for almost a year I felt like I was invincible.

There was nothing you could tell me to make me believe I was not one of the smartest young traders in the business.

My confidence was through the roof and the environment was primed for some of the things I was implementing in my trading.

I started to view the market as a piggy bank. The money was flowing in and I was fully embracing it. I would go out to eat, cover the tab. Was more open to splurging on things I never had, didn’t care to think twice about the cost because I knew “I would make it back next month”

I was not making what senior traders was pulling, but for a young guy in NYC I was doing well.

THIS IS A DEADLY MENTALITY !

Take my advice, this is not how you should view markets/ risk, or edges. It ALWAYS catches up.

The environment shifted, and instead of listening to what the market was telling me, I let my confidence drive me into thinking “there’s no way I could lose”. I was doubling down on bad arbs and getting hammered fast.

The losses piled up and I was still trying to fight it.

P&L wise I gave back 35% of what my YTD P&L was in a matter of two months.

It hurt like hell but it was a lesson that needed to happen. Every trader needs to experience this to get them to that next level.

Markets will humble you FAST when your confidence is out of line.

I thank The Lord for that experience and the other ones I had as a junior. It’s best to experience it earlier on in order to mold your mentality into comprehending that you will never be smart enough to never be wrong, even with a great strategy.

Never will/ have I put my book at risk again, because of my ego or confidence. I am very accepting of losses and I accept being wrong very fast when the market shows me I am.

Young guys on the desk, I hope you remember this story and learn from it.

Your day will come, you will have a very favorable edge/ market where you press the gas. Stay humble, and accept the dislocation when it is identified. Size down when you are missing and size up when you are playing with house money.

Embrace losses it’s part of the game!