You have traded for years and have always been a good trader. Your profits far outweighed your losses. Through meticulous research and genius analysis, every call that you make seems to go your way. You are one with the market. Even on a 50-50 trade, the limits that you placed on your positions get hit at a ridiculous rate. That gives you confidence. You swagger down the hallway, everyone seems to applaud and make way for you, the brightest star of the moment. In fact, you are invincible.
Then, one day without you knowing it, the worse curse since the last Pharaoh of Egypt conjured upon you. What happened? Since then nothing worked for you. Trades after trades you make, the market goes against you. Even when all your research pointing to the direction you think is going to go, you lucky star deserted you. Even your computer goes down and the mouse stopped working for you. At night you sleep with the big bear sitting on your chest, and you are sweating it out. You tried hard to fix it, but the losing streak sticks to you like a male monkey just found a female pal. Your confidence is at the all time low.
What should you do? Increase your trade size and try to make it all back tomorrow? Wrong! Try trading another instrument that you never had your hand on? Wrong! Try reading a good trading book to bring the touch back? Maybe, perhaps.
The following are a list of things that you can try to do to bring that Midas touch back. However, before you go ahead and try any of that, first pat yourself on your back and tell yourself that you have done a great job. Don’t be too hard on yourself. Everybody has a losing streak that they have to shake it off like a bad cold every once in a while.
There is nothing like taking a short vacation. Even a heavy-duty machine needs a break, otherwise it breaks down. Giving a much needed break to your mind would do world of a good. If you can afford it financially and time wise, go away for a week. Somewhere exotic, Fiji, Borneo, Rome, Banff, Andalusia. If that proved impossible, take a short trip, a few hours away. Go away locally for fishing, camping, hiking or skiing with your childhood buddy. The scenic view mountains, lake, green forest, golden sandy beach would make you feel refresh and full of positive energy. You no longer feel the pressure to make a trade nor sleep with that big black bear heaping on your chest.
Do things you are good at
What make superstar athletes like Lebron James and Tom Brady different from the rest? Confidence. What makes Warren Buffet different from an average-Joe-trader? Confidence. Without confidence, his Berkshire Hathaway would probably never rack up an average of 20 percent plus return for the last 25 years of its operation.
Having said that, confidence is an essential ingredient to be a good trader. To build your dwindling confidence back after racking losses after losses, go and do things that you are good at. It does not have to be anything mammoth. It can be a negligible activity as long as you are good at it and it makes you feel good about yourself – e.g. playing guitar, writing music, painting, or gardening. Slowly but surely, you will regain the confidence that makes a person a good trader.
Seek out a mentor or talk to a buddy
There was once a trader in forex market who was struggling to cope with his job after the loss of his father to cancer. He was having very difficult time getting back into his regular trading rhythm. His assistant trader saw his anguish, summoned his courage and gave a Buddhist self help book to him. Upon and after reading the book, the trader’s trading performance improved significantly.
He thought to himself, “Hey, I know all these things but somehow I just never saw it.” Similarly, if you are having a losing streak it is very easy to be emotionally attached to the losses. In this case, it is advisable to seek out a mentor or talk to a trading friend. You would be surprised at how they can easily point out your trading mistakes.
Conditioning Belief and Motivational Tools
The competitive nature of market trading makes traders very similar to athletes. In order to win a championship, athletes need to have the belief that they can do so and perform at a high sustained level of motivation. Similarly, in order to be in the black for the year, traders need to have the belief that they can do so and work at a high sustained level of motivation through the entire year. The following are a few simple yet effective tools to kick start your motivational box and condition your winning belief:
- The positive effect of music. Have you ever had a music CD that you were constantly listening to while you were on a winning streak. Listen to that particular CD. It helps to condition the winning belief that you have inherent in you.
- The power of books and movies. There are many movies and books out there that would make you feel that you can do it too regardless how difficult your tasks are. Some of the movie examples include Pursuit of Happiness by Will Smith, Family Man by Nicholas Cage and Rudy by Sean Austin. Book examples include Ugly Americans: The True Story of the Ivy League Cowboys Who Raided the Asian Markets for Millions by Ben Mezrich, Obscene Gestures of an Invisible Hand: Financial Doom and the Death of Culture – The Lighter Side by Jeffrey Trester, Feel the Fear and Do It Anyway by Susan Jeffers. These movies and books would help keep you highly motivated and trigger your winning belief.
- Visualize the big picture and create plan with small steps to get there.
- Maintain a healthy ego.
These small little steps would make a big difference in your P/L at the end of the year. Every successful trader has their own way of maintaining their high motivation level and winning belief.
Have a lot of sex!
A trader got to do what he or she got to do.
Get back into action
This is a crucial step in getting back into the winning ways. If you get this right, you are laying the foundation for a sustained winning and profitable streak. P/L matters. No money no trade. It is as simple as that. After taken all those steps above, it would be a mistake to get back into action by making a large size trade. It is highly endorsed that one paper trades or makes small size trade before slowly getting back into your regular trading rhythm.
- Continue trading despite emotional exhaustion.
- Attempt to cover losses with increased trade size.
- Increase trade frequency – without proper trade setup.
- Get into gambling mood. This is the worst of all devils.
Even if you tried everything mentioned above and you still failed to recover that winning formula – then PRAY HARD because the worst and most vicious curse that befall you.
Joke aside – do not worry. Be confident in yourself. You would do well.