I dipped my toe in the cold water of trading for the first time at the end of 2008, almost picking the exact bottom of the bear market following the financial crisis.
Looking back my timing was mostly luck, since I had just started reading some books on investing and knew very litte of macroeconomics and or technical analysis or anything at all of that nature.
Anyway, since I knew so little (and could admit that to myself), I decided the best thing to do was to buy some index funds following the Swedish, European and U.S markets wich would give me exposure to the broad market, but did not include specific sector of company risk.
I had no ambition to be an active trader at this point and felt this was a good place to park my money while I was focusing on studies. I didn’t do anyhing with them until the summer of 2011.
Then I sold all of them and bought some put options on a few selected stocks (if you’re not familiar with options, it’s basically a bet that the underlying stock will fall in value).
This also turned out to be exactly the right timing since the overall market dropped about 25% in a little more than a week. At this point I had read pretty decent amount of books on technical analysis and that was what made me realise that it was likely we were at a market top and due for a correction.
After this early success I started to form a theory about success in general.
I had read many biographies of successful people and it seemed to me, that every single one of them had had one or several epic failures.
From their failures they gained the motivation and the lessons needed to become successful in a huge way.
I saw the epic failure as the cause of the later success rather than something to avoid at all cost.
So I figured: why wait for failure when I can make it happen?
I’ll admit I didn’t think ”I will make sure I will fail” but rather ”I’ll take on extreme risk and if I win I get lots of money and if I lose I will get the ”epic failure experience”. So I saw it as a win-win.
In the choppy markets following the 2011 market drop I had my unorthodox theory in mind as I started to take crazy big, risky positions in options.
Since my trades were trend following and the market was very choppy, I started to loose money fast, and way more than I gained in my previous wins in the market.
I made even larger bets, trying to win everything back quickly, wich of course was a mistake and led to even greater losses.
I rememer thinking to myself on several occations: ”now it can’t possibly get any worse” and soon after that it always got a lot worse.
Emotionally, this was way more painful than I had imagined.
The money I lost was made and saved through hard work and living frugally for a long time and included some money my parents and grandparents had saved up for me, to give me a good start in life.
That I felt particulary guilty of losing.
Within a few months I had lost about 60% of my net worth.
I had just finished school at this time and had no job and no idea how to make the money back, let alone make a living.
I litterally felt like I had the weight of the world on my shoulders and actually started to slouch badly, walk around looking at the ground and in general feel really depressed. I realized I had to stop trading or I would end up killing myself.
Only a few weeks later I started to get some insights into trading and investing and bought a few stocks long term and made some small short term trades.
Some of the trades ended up making money and some lost money.
That didn’t really matter to me since I had gotten the fire in my belly that I needed.
I stayed up late at night, styding historical markets, reading annual reports of hundreds of companies and reading lots of books on trading and investing.
Now, several years later I have read hundreds of books on the subject and many of the best ones I’ve read as many as four or five times. Some sections In those books I’ve read probably more than ten times.
I also managed to get a job at a very small startup company, responsible for managing the financial department (only me in that department) and in sales (comission only), since the financials only took about 25% of my working time in the beginning. Since I was still under a lot of pressure to make a living I HAD to be successful in sales, so I put in a huge effort and started to perform increasingly well.
A lot of other things needed to be taken care of in order for the company to be successful, and since I couldn’t afford have my employer go bankrupt (I would lose my job, and jobs were scarce) I had to fix them myself. The owner was seriously ill at the time and was of little help.
I really made an impact on the company and naturally got promoted as it grew to more than 10 times it’s initial size (and counting).
To make things even better my long term investments started to pay off. Several of the stocks went up more than 100% and became the starting capital I needed to do some various business ventures and continue trading.
Some ventures turned out great and some caused mostly headaches, but thats the way it goes. I was able to make the best of every situation.
Trading and investing continues to be my main focus and a source of great enjoyment. I’ve included a screenshot of the development of the main account I started soon after I felt I was getting back on track.
The picture is copied from my main trading account. It has been edited in order to not reveal my name and the size of my gains in terms of swedish kronor, since I felt that information would be too personal. It haven’t been edited in any other way. The yellow line tracks the Swedish SIX30 return index (wich includes dividends). The index showed a gain of 48% during this period.
Looking back I consider my losing period one of the most imortant events for my career.
Helping me gain the right motivation, realising the importance of doing proper reasearch, learing to control risk and perhaps most importantly learning to deal with intense emotions in face of adversity.
I finally realised that my problems were really tiny and nothing to spend energy on. Me and my close ones were never in physical danger, I never had to be hungry and I was healthy.
Note: You should not consider any part of this story advice and you shouldn’t do it for yourself (unless you want to and can make sure that you can do it without having your family starve or end up homeless).
This is the first time I have ever posted something publicly and I would very much like to get your feedback.
Would you like to read more about my failures? or successes?
Get advice on good books to read?
Read about my breakthroughs?
Was this post to long and should I try to post shorter ones instead?
Or anyting else?
Please let me know
Sorry for the screenshot. Had it typed yesterday and couldn't post but the reply was saved om my phone.
Hi,
Thank you for sticking through the whole thing and thank you for the constructive feedback!
I will try to keep everything in mind in my future posts!