Better System Trader
214: Trading Triumphs: Kevin Davey's Journey To Success Part 2
Dec 5, 2023
Kevin Davey, an experienced trader, shares his journey from relentless losses to transforming his trading approach. Topics include the perils of scale trading, emotional and financial impact of repeated losses, transition to algorithmic trading, risk management insights, and the importance of diversification as a strategy.
19:45
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Quick takeaways
- Scale trading in the wheat market can lead to significant losses and margin calls, highlighting the importance of avoiding strategies that make a bad situation worse.
- Experiencing drawdowns and setbacks is crucial for a trader's growth, emphasizing the need for resilience, risk management, and sticking to a trading plan.
Deep dives
The dangers of scale trading and margin calls in wheat trading
In this podcast episode, Kevin Davy shares his personal experience with a trading strategy called scale trading in the wheat market. The strategy involved buying contracts as the price of wheat went down, with the expectation that it would eventually turn around and generate profits. However, Kevin recounts how this approach led to a series of margin calls and escalating losses, ultimately depleting his trading account. He emphasizes the psychological baggage of adding to losing positions and the importance of avoiding such a strategy. This defining moment taught him the crucial lesson of not making a bad situation worse.
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