The Psychology of Re-Entry

Here's some great email Q&A:

Question:

I had a question around re entry, staying alert and the psychology around it.

How does one stay mentally alert and focused when stalking for re-entry opportunities when: say the 1st entry resulted in a 1:1 for the 1st contract and a break even stop for the 2nd?

Also, in the above scenario, since some money was made (albeit small), the fear of re-entry causing both contracts to be stopped out and hence a net loss is also very real.

Reply:

Having a consistent and effective ability to re-enter stopped out trades is ONLY possible when you have:

(a) a positive expectancy strategy,

(b) belief in the strategy,

(c) appropriate skill for trading the strategy,

(d) belief in your ability to trade the strategy,

(e) loss is small enough to not cause any concern,

(f) loss is pre-accepted, and

(g) you have truly understood and accepted the longer-term nature of this game (profiting over a series of trades rather than each individual trade).

(g) is the one that I think is the hardest.

We all know at a rational level that this is a long term game, and that we can't win on every trade, but it's not really "known" at a deeper fundamental level until some point far along our journey, when you've seen enough losses and drawdowns to really believe that they will be overcome.

Until you have all this in place, fear of loss will impact upon your trading decisions, causing difficulty in re-entering a stopped out trade.

See the following articles; but in particular the first one.

Here: http://yourtradingcoach.com/trading-process-and-strategy/stop-hoping-your-trade-will-win/

Here: http://yourtradingcoach.com/trading-process-and-strategy/winning-through-losing-better-1-of-2/

Here: http://yourtradingcoach.com/trading-process-and-strategy/winning-through-losing-better-2-of-2/

Here: http://yourtradingcoach.com/trading-process-and-strategy/stopped-out-but-the-premise-remains-valid/

Here: http://yourtradingcoach.com/trading-process-and-strategy/you-have-too-much-focus-on-individual-trade-results/

Here: http://yourtradingcoach.com/trading-process-and-strategy/omg-one-of-my-trades-lost-money/

Here: http://yourtradingcoach.com/trading-process-and-strategy/trading-with-the-right-expectations/

Here: http://yourtradingcoach.com/trading-process-and-strategy/losing-sessions-expect-them/

And quite possibly more if you search through the archives: http://yourtradingcoach.com/site-map/

Or the search function on the RHS of the blog page: http://yourtradingcoach.com/blog/

Happy trading,

Lance Beggs


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