Stressful success can feel a lot like failure

I switched to Tradestation near the end of my second year of trading. After a couple months of learning the interface and trying out some ideas, my intuition kicked in. A vague idea was forming, but I couldn’t get a handle on it. Then, more on instinct than anything, I made a trade on September 1, 2005 that proved the catalyst to understanding. It went up 55% that day. I hopped out, and started systematizing that intuition.

It took some time, and there were some fits and starts, but I put together an approach that ultimately returned 140% profit in the following 8 months. Using no leverage, for what it’s worth. That’s the good. The bad was that it was killing me. The system was simply too stressful to trade while holding down a full-time job. Eventually, the stress led to mistakes, and what should have been a 10% drawdown turned into a 25% drop with the help of numerous mistakes on my part. Though I managed to sort my way through it and saw the beginnings of a nice recovery, I ultimately decided to set aside the system for that imaginary time in the future when I can trade full time.

So I had proven to myself that I could succeed, yet as I entered the summer of 2006 I felt I had to start from scratch, with far more emphasis on building a system that was relaxing, even if the returns were much lower. I had gained a new appreciation for the debilitating effects of stress. Stress doesn’t stay within neat boundaries, it spills over into all areas of your life. And I had also come to a better understanding of my strengths and weaknesses as a trader. I had developed a certain style, a personality, as a trader. Now I had to find out if I could invent an entirely new trading system that fit my style, gave good returns, and allowed me to relax.
Success -- sort of