It’s been a week of incredible opportunity and incredible challenge. We discussed the challenge a little on social media, with some good lessons that I thought should be shared through this channel as well.
This social media post struck a real chord with viewers, in comparing the opportunity from Monday and Tuesday and discussing how different conditions demand different expectations. And suggesting that perhaps there was no need to beat yourself up if you struggled to profit.
Of course, this applies not just to NQ 1 minute charts. The same concept applies to whatever market and timeframe you trade. And applies regardless of whether your preference is for directional markets or rangebound markets.
There will be periods where conditions are ideal and you should demand strong performance. And periods where conditions are far from ideal and you need to scale back your expectations. Sometimes, a good outcome is simply surviving to trade the next day.
And sometimes that challenge continues longer than you’d like…
The vertical scale in these images is the same from left to right. Tuesday (left) was narrow range. Wednesday (right) was far worse, less than half of the current average range.
Again, let’s not beat ourselves up if we struggle to profit on a day like this. Sometimes a good outcome is simply containing losses and surviving to trade another day.
So let’s add to the above posts with an important point.
In an ideal world, we would not judge ourselves at all according to the outcome. Positive or negative outcome for one individual session is irrelevant. We judge ourselves on process and our individual performance in implementing that process.
But let’s be honest.
This is not an ideal world. And until you’ve got a whole ton of experience behind you and have seen the irrelevance of day to day results, I know for a fact that we all fall into this trap.
Achieve profits and we’re on top of the world.
Take a loss and we condemn ourselves to an evening of misery and self-damnation.
I know this is true because traders email me. And half the time I look at their charts and think, “What did you expect? Look at what the market offered. Instead of pushing for a career-defining win on a day that didn’t offer this, your job should have been to limit damage as best you could. Recognise the challenging environment. And adapt.“
So if you’re going to let the outcome define your mood, why not at least make this more useful than the simplistic idea of “profit is good, loss is bad“.
At least try to adjust your expectation for outcome to match the environment.
A positive 2R outcome might be a poor result in a session that offered the most favourable conditions. You should not be happy if you achieved 2R when much more was available. Push yourself. Demand better.
Whereas a negative 0.5R outcome might be an exceptional result in a session that offered the most unfavourable conditions. A session that offered all likelihood of a much greater loss.
If you find yourself judging your self-worth on whether you profited that day, or not, at least make the judgement more realistic.
Assess the conditions post-session as to whether they were highly favourable, completely unfavourable, or somewhere in-between. And before you congratulate yourself for a profit, or beat yourself up for a loss, pause and seriously ask whether or not this result is actually quite reasonable, given the conditions that were offered this day.