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In a trading slump? Here’s how to break it

Taylor ConwayTaylor Conway ·

Everyone from professional athletes to traders has experienced a slump at some point in their career.

As traders, you need to battle everyday and get yourself out of any slump quickly, before it becomes detrimental to your trading account. With that in mind — and given that slides and downturns are a part of this business for everyone — here are some tips for pulling yourself out of a trading slump.

Journal all trades

Most successful traders journal all of their trades and you should do it too. When you’re trading, you should trade your strategy and not style drift; if you log all of your trades, you can review what you have done for clues on whether you have stayed tight and on point.

Look for potential changes or discrepancies in your trading; this could be an indication of why you’re losing money. Don’t just look at the slump, but review your journal for times when you were consistently profitable, looking for noticeable differences in what you have done.

Furthermore, your journal shouldn’t only track your trades. Some traders track what they eat, their thoughts and feelings, changes in personal life and more, anything that might clue them into what is distracting them or working in their favor.

Evaluate how your strategy fits current trading conditions

Some strategies break down in certain market conditions.

You should know the circumstances that are best for your strategy; if market conditions are working against you, you might cut loose from your strategy for the time being. For example, if you’ve been using a mean-reversion strategy in a trending market, you might want to reevaluate your plan of attack and look to use another battle-tested strategy that is better suited for a trending-market environment. Again, having a trading journal could help with this.

Step away from the screen and reflect on your performance

When you’re in a trading slump, you need to face your problems head on.

Most traders are glued to their screens all day; it can be hard to step away in good times, and even more difficult when you’re feeling the heat of a slump.

But the anxiety of a trading slump — and the self-induced pressure to make back all losses quickly — can mess with your mindset and cause breaks in your discipline. You start looking for any port in a storm; that’s flailing instead of trading.

When this happens, it’s best to step outside and away from your computer, and do something unrelated to trading. This could potentially give you a new perspective into why you’re in a slump; getting rest will help you think and clear your head, which will help when you get back to trading.

The bottom line

If you’re in a trading slump, remain calm and try to get out of it unemotionally using these steps. Slumps are common in trading, so don’t let one put you off your game. Evaluate what you are doing, review your journal entries looking for what’s different, and examine how well your strategy fits current conditions, then breathe deeply and/or take a break to clear your head so that you can calmly get back to doing what should work for you.


Taylor Conway is the lead day trader at PennyPro.com. He is a short-term day trader of stocks and ETFs. 

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