Adrian Reid recounts a turning-point trading experience where he suffered 27 consecutive losing trades over about a month-and-a-half while trading small stakes. He describes the panic and second-guessing that followed, how he shifted from fear to curiosity, investigated the market behavior and his system, and ultimately adjusted stop-loss and sizing parameters so the system fit his psychology and became followable.
Questions this video answers
27 consecutive losing trades.
About a month-and-a-half.
Chapters
The first one was not so much about the drawdown as what led to the drawdown we had. At the time I was living in a small three bedroom townhouse. There was a little, the spare room where we had set up as the study. And I was doing my back testing in a corner in that study. It was shared between my now wife and I and I had been systematic for a little while and I was doing my analysis and I was feeling very uncomfortable about my training trading at that point because I had loss after loss after loss and I was in drawdown. It wasn't catastrophic. I was risking a very small amount of money. So it wasn't the depth of drawdown. There was a fact that I had, if you can believe it, 27 losing trades in a row. Can you imagine how hard is it to keep pulling the trigger? Like buy stopped out, buy stopped out, buy stopped out and again and again. And this was, it was over a month and a half. And I was systematic. I had back tested my strategy. I knew it had an edge. But I won't say I was an expert at back testing system development by any stretch of the imagination. I knew enough to be profitable. But there were some gaps, let's say. And I was sitting there, I was like it's not working, like it's broken. What do I do? Do I pull a pin? Do I keep trading? Do I stop trading? Do I take my cash out? Do I close my positions? Like this sort of escalation of questioning of myself and what I was doing was what I was feeling. And it was like getting faster and faster and faster. The more losses I had, like the more frantic that second guessing of myself was. And if anyone has been trading for a while there's. The markets put pressure, not it's not personalized, right? But the market does things which creates mental story and pressure for us as traders. And so I was panicked. Like 27 losing traders in a row. Like I thought my system was profitable. It's not working. What do I do? Why is this? But again, back to what I said earlier, I flipped the switch of curiosity on. Well, I didn't expect this. Why is this happening like on the charts in the market? What is the behavior that's causing it? And as soon as I even just now reliving it and then making the switch to curiosity rather than panic or fear is uplifting in terms of how I'm feeling, right? And I'm human, like I still have emotions, I'm not a trading robot. And particularly when I go relive the past. I can remember the emotion in my body and I remember when I flicked it to curiosity. It's like, okay, something's different or something's weird, or I missed something. What was it? I threw myself into the research at a another level. And I've done this at a couple of points in my trading career. It's like, okay, I'm obviously missing something. Let's just go deep and figure out what the hell it is. And at that point I threw myself into it and I figured out it's just a stupid mistake. I just missed it. My stops were too tight and the market had shifted from being in a very clean, smooth trending phase to having enough volatility that my stops were getting hit all the time. And I had the interplay between stop loss, position sizing, and so on in the system. I didn't have set in a way that worked for me, for my psychology. I mean, I could argue that most people can't tolerate 27 losing trades in a row. That's pretty tough. But it was well outside my comfort zone and I had missed the fact that I could fine tune my system to make it easy for me to follow just by adjusting some of the parameters. And yeah, I might sacrifice a bit of theoretical backtest and profit, but it would be followable and it would keep my psychology intact. That 27 losing trades in a row, the resulting drawdown actually wasn't that big because I was risking a very small amount of money. But that panic was the first thing that I felt and that was my first real deep dive into I've missed something, what was it? And so finding that was pivotal to my whole journey, hence, henceforth, because that was the realization that my systems have to fit me because the system was profitable. It's just that it went through a phase with a lot of losses that I didn't want to cope with.
