Discover more from Upside Unlimited by Greg Duncan
Using Irritation as Inspiration to Become a Better Trader
A system to turn the bad times into good...
I’ve had a rough past 10 trading days, seeing my account swing a matter of 10% equity in just a single trading session (thanks $CRDO).
While not ideal, the situation called for some reflection on my end. Here is my main takeaway:
You have to use irritation as inspiration to become a better trader.
Yes, I was (and still am) irritated by the massive hit to my account and less-than-ideal first two months of performance in 2023. But, irritation can be a powerful motivator if channeled correctly.
Rather than getting down on yourself, you can use these emotions and energy to make some serious strides as a trader and come out better on the other side.
Here’s the framework I’ve been running through over the past couple of days:
Identify the problem and your associated emotions (irritation)
Take time to reflect & look for the root cause
Once root causes are understood, look towards a path that resolves issues (inspiration)
Adopting this mindset has allowed me to use irritation as inspiration and implement some new rules in my trading, which I hope you can learn from/apply immediately as well. Here they are:
Be more in tune with the percentage of revenue/business that other companies represent to the company in your portfolio.
For example, CRDO’s top supplier represented over 40% of its revenue for the quarter. If for any reason, this top supplier decides to pull out of a deal with CRDO, catastrophe is on the horizon (and that is exactly what happened last week…)
Here’s a great tweet from Matt Caruso earlier last week, highlighting some potential risks of recent leader AEHR:
This is largely my most applicable takeaway after the whole ordeal.
The point is, make sure you have a good grasp on clear risk factors that could heavily deter the financial outlook of any company you put your money into.
Now onto the next rule:
I just got gapped against. Do I sell immediately or wait for a rebound?
I saw this question asked a bunch on Twitter and think my takeaway after the fact is pretty simple:
At any point that the technical story takes a massive hit, completely changing the chart, I want to be out at any price. Traders seem to cling to the thought of getting some dollars back by waiting for a bounce - but in reality, a massive gap down is likely to continue down as institutions start distributing in a big way…CRDO is no exception.
By selling out immediately, you can sever the ties to the position and begin to reflect & look for better opportunities elsewhere.
Some Final Thoughts
Even though it sucks to lose money, there are some pretty serious rules that have come out of this situation. And, long term, I think these rules will save me much more money than I have lost over this recent cycle.
None of this would have ever been possible if I would have let myself be down and out, not wanting to find inspiration through irritation.