I just saw this video by John at the High Probability Trading blog (also embedded below… be warned, there’s a lot of profanity in it). It’s painful for me to watch. I’ve certainly had my bad days in the market but never anything like this:

I hope he gets through this OK. Perhaps the post Dr. Brett made in response to this video will help him out — or anybody else in a similar situation.

Remember that preservation of capital is key. We should be more concerned with return OF capital than return ON capital. Proper position sizing and, I think, risk management (was this originally meant to be an over-night hold?) would have saved John’s account from this disaster.

Things are looking real ugly for the open tomorrow. As I write this the S&P 500 futures are down 4.75%! This is the kind of open many traders have been waiting for. You can bet the gap-fade crew, myself included, will be in full effect tomorrow. But that’s no guarantee of a bottom. There will be a lot of forces at work tomorrow — not the least of which will be the margin clerks.

Be careful out there. Plan your trades and trade your plans.

Update:

This is from a more recent post on the HPT blog (emphasis is mine):

I need to be to work in 2 hours, and I can’t manage this position, I have to sell out. About 40k in 2 days,,,,,,,,,,,,gone. Speechless. One bad trade, is all it takes. 2 and a half years of trading thrown down the drain on 1 trade. Who would’ve thought the Futures would tank as much as -500pts on YM with the US markets closed. I didn’t, and I never really wanted to be in this position, but I couldn’t accept the small loss.

I always tell people that traders typically don’t blow up their accounts in an instant. It’s usually the case that there was a point where, if the trader followed his original plan, he would have taken a small loss and been able to recover. When that goes wrong it’s generally because he couldn’t take the small loss. I’ve certainly been there before.

As for the “who would’ve thunk it part”, I think a reading of one of Taleb’s books (”Black Swan” or “Fooled by Randomness“) and/or “Trading in the Zone” is in order.