I don’t play poker and I know very little about the game, but I nonetheless enjoyed the movie Molly’s Game, directed by Aaron Sorkin and starring Jessica Chastain.
The scene which hit me the most was the one above about the poker player Harlan.
It’s almost scary, because of how real it is.
This is a cautionary tale which anyone who day trades should know about.
Harlan “played tight”, and by that I’m assuming it means he was a very careful player.
He was shrewd and gave very little away. According to Molly, Harlan was “playing poker while the others were gambling”.
Harlan was the type of player you hated to play against because you had nothing on him.
But watch what happens to Harlan in the scene above.
He was doing really well that night, but a strange and unexpected loss causes him to snap, and he then starts to degenerate into a revenge gambler.
He started trying to “swing for a home run on every hand”.
He ended up losing BIG. Really BIG.
And that eventually ruined his marriage and his life.
Harlan kept borrowing more and more money, and his famous last words to Molly were “I just got to get back to even”.
I say this scene is really scary because it is so real.
It’s no different from what happens in day trading. Anyone who has tried day trading will understand what Harlan went through.
Revenge trading? Been there, done that.
Telling myself I want to just get back to even? Yup, done that many times as well.
That is why trading discipline and money/risk management is so important.
I’ve learnt things the hard way, and I suspect it’s the same for many other day traders as well.
Always have a stop-loss.
Always only risk a small percentage of your account per trade.
Never take a big risk on any single trade.
Don’t average down when you’re losing.
Don’t swing for the fences.
Don’t let losses get to your head. Once you’re on a losing streak, just walk away.
And lastly, don’t be Harlan.