Hey Guys and Gals,
In trading, much like in any other field that requires performing at your peak, your emotional state may have a major impact on end result.
If your mind is not in a good spot – there’s a good risk you can do some unintended damage to your account.
And then there’s the negative feedback loop too…
You aren’t trading well, you get frustrated, next thing you know – you’re trading even worse than when you started.
But there’s good news too – it doesn’t have to be this way!
You can learn emotional discipline much like you can learn anything else.
Here are a few habits to practice that can help you keep your cool when making trade decisions:
If I had to pick one top reason why some traders consistently lose money – it wouldn’t be bad preparation, bad setups, or bad luck.
The one factor that can time and time again force bad decision-making and send your account down a steep death spiral is oversizing.
The reason I see it occur so often is simple – mentally, it’s really hard to fight that internal greed that virtually all of us have!
And then there’s the negative feedback loop in full swing: the more you lose, the more you have to make back, therefore the more size you have to put on. And the more size you put on – the more you lose.
This is exactly what lies at the core of the issue: force yourself to control your size right away, so you don’t have to put in the extra effort later.
Your risk management has to be your top priority: avoid having a bigger position than you had intended!
I get it, the market is tempting… and the temptation never ends, no matter how many times you get burnt by it.
Therefore, if you’re serious about making it, you have to learn discipline and you have to follow your plan, no exceptions made.
If you’ve just oversized and lost – it’s not a bad idea to walk away for the day.
If you’re having a bad streak – you may want to cut your size down for the next few days/weeks, until you feel confident again.
There’re many ways to go about this, but trust me – I’ve seen far more people regret they got too big in a loser than those who were too small in a winner.
Trading is a Process, Not a Chance
What separates a true elite performer from an average guy?
What makes the best athletes the best?
It’s consistency – the ability to come out on top in the long term!
Look, Lebron James or Leo Messi don’t win every single game they play. They don’t win every tournament and every season either.
But they still win enough to be considered among the all-time greats!
That’s because they know they can’t win everything – a failure doesn’t drag them back, it helps them move forward.
When they lose a game, they analyze their mistakes and move on doing the best they can to win the next one.
The same principle applies to trading: you can’t be green in every trade, every day of every month – and that’s ok.
But the best traders I know can’t be bothered by that – they take note of what went wrong and move on to the next trade, next day, or next month.
Don’t sweat a bad trade or a bad streak of trades, a trade is just a trade – one of very many you’ll have in your career.
Analyze what went wrong and keep going like nothing happened.
The path is made by walking.
Learn to Admit You’re Wrong
If you want to make it easy for the market to destroy your account, there’s one quick fix: play stubborn with it.
The market always knows best and most big egos get humbled down very quickly and plenty painfully.
If your intended game plan isn’t panning out – learn to admit you were wrong.
There’s one important thing to understand: being wrong doesn’t make you a bad trader; being stubborn and undisciplined – does!
As I’ve said many times through the course of this letter – you are going to lose, there’s no way around it.
If you’re wrong in a particular trade – your best course of action is to get out and identify what got you wrong.
Don’t try to prove anything to the market, it’ll end up a very expensive lesson to learn.