The Road to Successful Trading

10 Successful Traders avoid the “blowout trade”. 
 
Arrogance and a false sense of security can cause the hubris of the “blowout trade”. Within the 
context of being a successful trader, a “blowout trade” refers to the trade where all caution and 
discipline is thrown to the wind and results in trading losses that wipe out any gains made over a 
period of time; it is the “big Labowski”, which can send a trader limping to the sidelines-with a 
trading account and ego in tatters. 
Here is how it normally happens. The trader experiences a series of winning trades. It appears that 
the indicators used in selection are right on and the results are behaving with unexpected regularity. 
The trader begins to feel overconfident that a high probability trade becomes “easy to spot” and 
discards all or part of the trading system discipline used as the litmus test. Indeed, trading discipline 
goes out the window and money management rules violated in a fit of greed and arrogance as the 
trader puts a chunk of the account on just one trade. Normally, even the primal rule of placing stops 
will be forgotten. It is an act of trader insanity and the trading gods react with characteristic glee as 
they provide overwhelming hubris.
Successful traders understand the word hubris and honor it at all time by clinging tenaciously to 
their trading system. 
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Chapter 10: The Power of Objectivity 
 
For many, isolation simplifies life. In fact, becoming an independent trader free from the office BS 
can be a powerful draw for many burned out W-2 workers. Dressed in Shorts and a T shirt, feet up 
on the desk and sipping coffee while watching the computer screen, can be a seductive image to 
some victims of the Dilbert world. In fact, it is an environment of seemingly little accountability.
But is this the real world of being an independent trader? 
Consider the following scenario. You have invested a lot of time studying everything you could 
about investments and trading. You have developed a detailed trading plan and spent over 6 months 
paper trading and developing your trading system. Through most of this process of preparation, you 
not had a two-way discussion with anybody on the complexities of trading except for a few 
operational questions with the trading desk of your online broker. Your spouse knows little about 
what you are doing and when you try to talk about it, his/her eyes glaze over as they try to pay 
attention to what you are saying. You are alone in your toil. You spend hours each day and can 
share none of it with anybody except the sleeping dogs at your feet. Indeed, you are the sum total of 
what you have taught yourself. But is that enough or even the wise thing to do? 
Trading is a complex subject and presents many unusual events that are not found in any book or 
online course. Successful trading is in the details and most content on the subject deals with mostly 
generalities. A danger is that the independent trader can become too isolated and is cut off from 
valuable information found in the experience of others. It’s a valid argument. 
An isolated trader becomes the captive of his/her perceptions. Over time, a subtle arrogance can 
build up and the ideas and experiences of others are seen as rather irrelevant to the isolated trader’s 
world. The sad truth is: how many traders may have left their trading potential unfulfilled because 
they hit a bump in the road and became discouraged. With nobody to turn to for help, how many 
potentially successful traders have given up just because they were operating in their own vacuum?
Take this to the bank: all traders hit slumps. Unless you are properly prepared to deal with losing, 
the chances are about 80% that you will drop out of the trading scene at the first sign of a serious 
losing streak. 
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There is no need to trade in isolation and the benefit of hooking up with other traders through 
various ways is strongly recommended. Some of the most popular ways to resolve this concern are 
the following: 
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