Transcript excerpt from a YouTube video (Kardec Trader) discussing trader psychology during large drawdowns. The speaker warns about the dangers of large losses (e.g., accounts falling from $10,000 to $2,000), urges traders to step back, analyze failures, emphasizes proper risk management, gradual rebuilding of confidence, and playing the long game.
I think the worst spot for traders to be in is when they have a big drawdown. They have a $10,000 account or $100,000 account, and they lose 20 or 30,000, or their $10,000 account goes to 2,000. Because you come from a place where it's like, it's a deep, dark hole, you're unmotivated, you get very erratic on just trying to make the money back. You put on big trade, big risk, and ultimately leads to people blowing their account. So if you are in that place where you have a big drawdown, I said, just take a step back, realize why you had the big drawdown, realize what went wrong. Most of the time, you shouldn't have a big drawdown if you have proper risk management, and then come back slowly, trying to build up your confidence, day in and out. Once again, play the long game. That's what I always say.
