Even the most seasoned traders I know have times when they just keep losing…
And it quickly gets frustrating beyond words!
You walk in every day, you sit at your screens, you make trades… and almost all of them turn up bad!
It literally seems like everything you know and try just doesn’t work!
Well, don’t despair.
Most likely, you’re in a trading slump – we’ve all been there and done that.
What differs a winning trader from a loser is how you handle one.
Here are some tips to learn the most out of your trading slump and get out of it quicker:
In many ways, trading is a craft, and as with any craft – there are “classic” mistakes you always have to keep yourself in check for.
In a job where the stakes are so high that any little detail can throw you off track, it’s important to keep your emotions under control.
The first and possibly most important thing you can do in a slump is sit back and think – has your frustration led to you losing your basic discipline?
Are you trading too big, trying to make up for your losses?
Have you been overtrading, jumping on subpar setups?
Are you disregarding your risk parameters, thinking you’re about to hit that one big trade?
These are just a few of many destructive things you may find yourself doing whenever you’re having a losing streak.
If the answer to any of the above is yes – don’t beat too hard on yourself. What you’re going through is perfectly normal and it’s only fair it gets on your nerves.
The answer and solution is simple – you have to re-learn the basic rules of the game.
It is never a fun thing to start from scratch, but in many ways that’s exactly what you have to do.
Think of the times you first began your learning process and do it all over again – cut down the size, limit the number of trades you take per day, focus on select few setups.
If you truly stick to it, It won’t take you more than a few days of disciplined work to get back to the old ways, but trust me – it will save you a lot of nerves and capital.
The quicker you realize you need to start over, the better and easier it will be.
Is Your Risk Still In Check?
The biggest peril of many traders, even the most experienced ones, who find themselves having a rough time in the markets is beginning to disregard your risk parameters.
You lose once, you lose twice, you lose a third time… then the tenth time, and then some on top!
Next thing you know, your frustration leads to oversizing or to overholding large losing positions, in hopes you’ll get that one good trade that covers the drawdowns and brings you back on track.
The sad truth is – when you’re in a slump and in a mental distress, this trade will likely never come!
You’ll just keep digging a financial hole, until you’re finally ready to start over – or, sadly, until your account is destroyed.
If you’re not doing great, your one and only solution is to improve your process, not try and hit a big winner.
If everything is on fire, why throw more oil into it?
Sit back, take a few days off if you have to and think it through – what you’re doing wrong and why?
Focus on improving your trading process vs making the money back quickly and you’ll see wonders.
Are You Adapting to The Market?
Last, but not least, as traders – we have to be agile.
The market is an ever evolving thing and if you don’t adjust accordingly, you’ll quickly find yourself irrelevant.
Whenever you’re in a slump – it is certainly possible that it’s just a temporary occurrence, your setups are out of favor at the moment.
But it can also signal a bigger issue – your setups are losing their edge. And that’s something a trader should always be concerned about.
Look, not every trading pattern you know will keep working – it’s natural for efficient markets to quickly “close the gaps.”
If something is too profitable, everybody jumps on the opportunity and reduces the profitability to average or below average returns.
Your job is to be aware of that and always be on the hunt for new things that work.
If patterns you’re used to seem to make no sense any longer, it might be a good time to sit back and reconsider your strategy – have your setups grown obsolete?
If so, can you look at recent winners and try to identify what went well?
Are you noticing any new ideas you can adapt going forward?
Don’t be stuck in the past. Look forward and learn from what the market tells you.