How my worst trade turned out to be my best trade ever!

Today I’d like to share a hard, but important lesson I learned early in my trading career. At the time, I considered it my worst trade ever, but in retrospect it turned out to be the best trade of my career.

Here’s why…

I started in the commodities business in Chicago as a broker for a company called Conti Commodity Services. Conti was a division of Continental Grain Co., one of the largest and oldest grain companies in the world. Back in the 70s, Conti was just starting a new division to handle customers in the brokerage business. I was lucky enough to have them hire me as I had no experience and very little education. But, I was enthusiastic and willing to learn.

So there I was at Conti Commodity Services dialing and smiling and looking to get business for myself and the company. All this was back in the 70s when grain prices were skyrocketing. After a brief time on the job, I guess I thought I knew better than everybody else.

So here’s my worst trade…

I was following the wheat market, just like everyone else because markets were hot. All of a sudden a slumbering December wheat market shot up dramatically on no news. I thought to myself that wheat had gone up too far and too fast, so I went short (that is I sold something that I didn’t own). It had to come down, right? That statement alone shows you how naive I was back then. Well, for a whole 20 minutes I looked like a hero. Rather than take a small profit when I had it, I decided I’d sit and wait for a bigger profit (that's called greed).

Well, you probably know what happened next. Wheat closed up the limit and I was unable to get out of my short position and finished the day with a loss. Well, I said to myself that wheat has got to pull back tomorrow, right? In the commodity markets, things only go from bad to worse when you’re on the wrong side of a trade. That’s exactly what happened to me and my wheat position. I am not going to bore you with the gory details or the pain I went through, but the bottom line was I lost $10,000 on that trade. It doesn’t seem like a lot of money now, but back then when I was just starting up my career it seemed like an insurmountable fortune.

To be truthful it was the best thing that could ever happen to me and here’s why…

I learned a very tough lesson in that wheat trade, one that I’ve never forgotten to this day. I learned that day that there are two sides to every coin, two sides to every sword and two sides to every trade. For every profit opportunity you see in the marketplace there is an associated risk that comes along with that profit. I learned the value of risk management and why there is no free lunch when it comes to the markets.

Later in my trading career, I lost much more than $10,000 in other trades, but it never bothered me because I was managing my risk. A friend of mine lost over a million dollars on one trade. To many, this would seem like an incredible amount of money to lose on one trade. But my friend was trading with $50 million, so a $1 million loss is only 2% of his risk capital which is certainly very manageable. When you lose 40%, 50% or 60% of your capital on a single trade it becomes difficult, if not impossible to recover from.

So when I say my worst trade happened to be my best trade, I mean it. In my mind that early loss in December wheat was a priceless education in risk management that I still use to this day.

I cannot say enough about risk management and how you should manage your risk, and I offer up some trading tips that will help you avoid disasters like mine.

You must use stops. You must be disciplined. You must be diversified. If you have those three core trading items in your portfolio, you can survive and thrive no matter what the market throws your way.

I hope that like me, your worst trade turns into your best trade in the long run. In fact, I invite you to share a trade that taught you a lesson in our comments section below.

Every success in trading and in life,

Adam Hewison
President of
Co-founder MarketClub

4 thoughts on “How my worst trade turned out to be my best trade ever!

  1. i am new to trading mostly UK spreadbetting although i am moving up to CFDs and hopefully other markets. I have had ups and downs in commodities hard to predict at times. For hedging my bets Some people recommend a long position combined with a short position but i am not really sure how this could be benefical unless you had a very high stop and eerily all my stops seemed to be nailed with high spikes and volatility. In terms of hedging your bets and diversifying for example commodities Gold Oil Silver or even wheat or forex. Which stocks would counterbalance or hedge Gold Silver etc?

    Thank you in advance


  2. I had experiece of taking wrong decision in commodity future. I shorted silver when the price was high (it was my wrong assu.ptio). On subsequet tradig days, it never came down and heading upwards only for25 days and the contracts expiry date has been reached and i had to book heavy loss because of my wrong assumption. That trade gave me a lesson.

  3. Dear Adam
    I don't have the depth of experience to share - but I have a question. I know you are an Apple fan with an iphone and we see you with your Apple tablet often on the programme .
    Is there a market club app for the Android Samsung G3 smartphone and Samsung tablet?
    I will join market club in January and am angling to get a smartphone for Christmas to allow me mobile access (although I already have a Samsung tablet.
    In an earlier post, Jeremy said that if you download Flash for Android it will work on your Galaxy S2. Have you any colleagues or members who do this successfully?
    kind regards


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