Damn it feels good to be a gangster! That pretty much sums up my attitude about trading over the last five months. I’m profitable on 20 of my last 24 trades, and I’m up over 57%, net, since August! There’s a little voice in my head that keeps saying “you’re on fire! Start making bigger bets so you can make even more money!” However, at times like these, it is important to stay humble.
Overconfidence in trading leads to big mistakes. All of my hard work over the last five months can be completely wiped out with just one dumb trade. Never risk more money than you can afford to lose and always be humble.
It’s also important to remember the amazing mathematics of 2 to the power of n. Given my recent trading activity, there is no reason to increase my risk level considering I’m on pace to more than double my money in a year. And this is where “2 to the power of n” comes in. If you start with only $1000 and you double it every year, then do you know how long it will take you to become a millionaire? Fifty years? One hundred years? Wrong! It takes less than 10 years!
Be humble. Trade smart.