November 17, 2008 at 1:29 pm | | Comments 2

Triumph Over the Trading Jinx

Recently I was chatting with another trader who was pretty down in the mouth. He had suffered a handful of setbacks (read: losing trades), leaving both his confidence and his account at lower levels than previously seen. The harder he tried to recover, the more he became fixated on the recovery. He had forgotten that improvement is a process, and therefore wasn’t focused on making high-quality trades and wise decisions. Instead, he was impatient, irritated and convinced of one thing – he was jinxed.

Although I am not superstitious, I’m definitely familiar with those times when it feels like I’m more wrong than right. When it’s more than just the occasional broken trade and losing money starts to occur too frequently. It’s never fun to endure, but it is something that happens to every last one of us at some point in our trading. It’s simply part of the process as a trader to be wrong sometimes. We slip into a funk, and we want out immediately.

The losing streak is my biggest fear as a trader, so I try to stay on top of things as best I can and adjust quickly when I start to see my performance slip. Here are a few ways in which I attempt to combat those periods.

5 Ways to Overcome Tough Trading Periods:

1. Accept it – they happen! If acceptance is the first step in a popular 12-step program, then it’s fitting to put it first on this list.  Seriously though, having the maturity to recognize that you’re not at your best is actually a sign of confidence – not weakness. A great trader is willing to continually improve, which sometimes means going through a few growing pains even when it doesn’t feel very convenient. Just like the best athletes in the world continually consult video footage of their performances, a great trader reviews what’s taking place in their trading and refuses to ignore those areas which need some attention. Psychologically, our ability to deal with events as they occur is largely due to our willingness to mentally prepare for their possible arrival. It doesn’t mean we think negatively that a losing streak may soon begin, but rather, we decide ahead of time how we’ll respond. Poor stretches of trading will happen, so accepting that is going to put you well ahead of those who simply deny it.

2. When you lose, lose small. As soon as you see that you’re drifting away from being at your best, shore up those positions and cut down your size on any new trades. If you aren’t seeing things clearly, there’s no reason to push it. Recognize even a small string of losses as a warning sign that it’s time to trade smaller, and then do it. And of course, don’t lose the lesson.

3. Balance out your life. Those who live and die by their trading results are in for a long road. There will inevitably be both profitable and pitiful periods, and so the key is not to let your emotions take over. Take the tough times in stride, just as you view the good times with a level head. Build your relationships outside of trading. Pursue some other interests away from the market, and you’ll be glad to have those diversions when you need them. After all, if trading is the only thing you ever do or care about, you’ll find it extremely difficult to ever get away from it – and times will come when you’re going to need a break.

4. Work on it. The best get good and then stay good. That means they never stop working to grow and improve. Seeking out ways to continually improve will give you other methods to turn to when your favorite approach finds friction, allowing you to shift slightly when conditions warrant.

5. Get up. We all fall down from time to time, but it’s how you get up that will really define your abilities. It’s never fun to lose money trading, but just because you take some hits doesn’t mean you need to stay down. Dust yourself off, and get back into the race. You’ll never recover by sitting around sulking and talking about what a ‘jinxed’ trader you are – that accomplishes absolutely nothing. So ditch the pity party and regain your focus. Traders trade, so even when you’re lacking that swagger that you have when at your best, step back into the ring and concentrate once again on finding your groove and booking some small gains. Be selective, but don’t be too shy to pull the trigger. The aim is to get your head right, not post an immediate, giant win. Nothing builds confidence like getting the bat back on the ball, so start small – but do start!

I’ll have a follow-up post to this one coming soon, so be sure to watch for it. In the meantime though, consider the ways in which you need to start making some adjustments in your attitude. Trading offers every one of us a ton of potential, but we’re only going to realize that potential if we approach it properly.

Trade well out there!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

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  1. I’ve quoted this poem on a number of occasions ranging from software engineering, project management to personal relationships and now once again – related to trading and this particular post.

    If you can keep your head when all about you
    Are losing theirs and blaming it on you,
    If you can trust yourself when all men doubt you
    But make allowance for their doubting too,
    If you can wait and not be tired by waiting,
    Or being lied about, don’t deal in lies,
    Or being hated, don’t give way to hating,
    And yet don’t look too good, nor talk too wise:
    If you can dream–and not make dreams your master,
    If you can think–and not make thoughts your aim;
    If you can meet with Triumph and Disaster
    And treat those two impostors just the same;
    If you can bear to hear the truth you’ve spoken
    Twisted by knaves to make a trap for fools,
    Or watch the things you gave your life to, broken,
    And stoop and build ’em up with worn-out tools:

    If you can make one heap of all your winnings
    And risk it all on one turn of pitch-and-toss,
    And lose, and start again at your beginnings
    And never breath a word about your loss;
    If you can force your heart and nerve and sinew
    To serve your turn long after they are gone,
    And so hold on when there is nothing in you
    Except the Will which says to them: “Hold on!”

    If you can talk with crowds and keep your virtue,
    Or walk with kings–nor lose the common touch,
    If neither foes nor loving friends can hurt you;
    If all men count with you, but none too much,
    If you can fill the unforgiving minute
    With sixty seconds’ worth of distance run,
    Yours is the Earth and everything that’s in it,
    And–which is more–you’ll be a Man, my son!

    –Rudyard Kipling


  2. Great stuff Alo, thanks for the post! You’re absolutely right, Kipling’s poem makes for excellent application in trading as well as other endeavors. Something for each of us to work on in there, thank you again!


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