Even the best traders sometimes have their bad days. But what separates them from the rest of the pack is their ability to remain cool under pressure and still find a way to turn things around. Sometimes, the strategy of turning bad trades around is to immediately recognize and jettison bad ones and get things right subsequently.
We provide examples of everyday traders who remained cool under pressure and were able to turn challenging trading situations into profitable runs.
- Dylan Collins
A certain brokerage firm put up an ad and Dylan Collins applied for the job. Collins, who had spent a great deal of his teen years playing online poker while in school, got the job, but with a clause. The company would provide him with $25,000 to start trading with, but he would receive no salary until he had earned and paid back the $25,000 loaned him by the company. In essence, he was already operating with a debt of $25,000. His online poker skills eventually paid off for him and he was able to achieve in record time what most other recruits before him were unable to achieve in one year. He has since moved on to bigger profits.
2. Rayner Teo
By his own admission on his blog, there were numerous times when he had bad trades that simply went bad. But that was until he was able to discover his Holy Grail in forex trading, which was a trend-following method that he teaches on his blog. Using this method, Rayner was able to turn around his bad trades into profitable ones. He was able to recover in six months, what he had lost in four years combined. Striking isn’t it?
3. John Paulson
Paulson had a life many young people had; partying when the opportunity came. Even when he left that life behind and got into trading, many people did not take him serious. He was also reported by some of his friends to dress carelessly. His hedge fund, Paulson and Company, did not attract many clients for long periods of time. He also shorted the subprime mortgage market and had to endure a nervy wait for his investment to turn out right, which it eventually did in 2007 and earned his hedge fund $15 billion in profit. Paulson personally made $4 billion.
4. Michael Burry
This medical doctor-turned trader who founded Scion Capital LLC hedge fund, recognized the impending subprime mortgage market crisis in the US and decided to short the real estate market. He decided to short the real estate market derivatives using his money and that of a few other investors. However, he had to endure a long period of draw down as the real estate market kept going up and putting his position in negative territory. Many investors in the fund who had given him their money to trade were angry and wanted to have their money back. However Burry was able to convince them to stay in the trade and when the bubble eventually burst, Burry’s hedge fund raked in close to $700 million in profit. However, he decided to shut the fund down as a result of the experience he had with his investors while waiting on the positions to come to fruition and decided to go solo, which he has been doing ever since.
5. Charlie Burton
This self-professed do-it-yourself (DIY) trader lost 250,000 British Pounds in his first year as a solo trader, but was able to make it all back and more as a result of the wealth of experience he gathered working for several years as a trader with Citi. His 6-figure bank account as well as his Porsche car are testimonies to how things have turned around for him.
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