I love it when we can start off a session with a nice winner.
It would be nice to always start off a session with a winner.
But that's not how this works. You WILL start off some days with a losing trade.
And it's how you choose to react that makes all the difference.
You have two primary options:
1. You can take the negative path. The path where you are not in control. The victim mindset where you personalise the loss and make it all about you. "Here we go again. I'm such a loser."
2. You can take the positive path. The path where you remain in control. The mindset where you take the loss as information and use it to drive yourself to higher levels of performance.
The first will increase the likelihood of poor decision making in the next trade sequence.
The second will heighten your level of focus and increase the likelihood of quality decisions and actions.
You do have a choice. And while your subconscious reaction will at times tip you towards a negative outcome, this is a skill which can be developed and improved over time.
Yes, how you react to a setback IS a skill. And you can improve it.
I want to share with you today one technique that I have found useful in shifting my reaction away from the negative and more towards the positive.
It's an initial and immediate conscious recognition of respect for my opponent (the market).
A little smile, a nod, a tip of my hat.
It takes the focus off me. And onto the market.
In a sporting context, it's a bit like pitching a ball to a much younger kid, who not only connects with it but smashes it out of the park. You're not getting down on yourself. Instead, there's a smile. And a nod of the head. And a "Damn! This kid's got some skills!". There is sudden, increased respect. And motivation to get yourself back into the game with increased focus and awareness.
In a market context, you've just taken a loss. Get the focus off yourself and onto the market, through a conscious recognition of respect for your opponent.
Smile. Nod your head. "Damn! Nicely done. I'll give you that one!".
And then focus. There are more trades coming and they need your full attention.
Give it a try.
Great article! By all means I’ll try your technique!
I usually personalise the losses, especially when I’m in a bad streak, every new loss is like “Damn it, I did it again!”
It’s a loop hard to break, each new loss drives me to a poor mindset and that mindset drives me to poor decision making…
Do you still have bad streaks? 5 or 6 losses in a row? or several consecutive losing days? If so, how do you approach that? Have you got some mindset hack or technique that helps you to break the loop?
Just a clarification about my question:
I guess nowdays, as you are consistent profitable trader since many years, you have the experience and the confident in yourself and your edge to don’t care too much about bad streaks. I was meaning mostly to your early days.
Absolutely yes, streaks of losses do happen. Consecutive losing days do happen. Take time out. Assess whether the issue was the market or you. Understand why this occurred. And commence again when conditions (market and/or you) are more favorable.
So a key part in this of course is being able to quickly recognise when we’re at risk of extended drawdown. You need rules for times to pause and check yourself and your performance. Catch yourself before the problem gets out of hand. The quicker you can recognise the problem and stand aside, the less drawdown you have to make up once you return to the markets.
If this is a constant issue though, in that one or two losses sends you into a drawdown spiral every time, then try cutting your size. Drop position sizes to the point at which they’re almost insignificant.
Thanks for your valuable advice. I’ll take it into account.
Wow …. I always love your insights and tips … but this one is really next level … thanks sir for sharing … you are the best
Thanks Mohamed! I appreciate the great feedback. 🙂
All the best of luck with your trading.
Love the simplicity of this. When you get knocked back, there does seem to be a loop of negativity that you can get caught up in.
It is interesting that the best trader I know, often times will laugh after a loss… like it doesn’t bother him one bit. Never knocks him off course. It almost seems as though he enjoys it. He really is just playing a game. Whereas most traders get caught up in the negativity loop after even one single loss.
I’m going to give the hat tip a try. Thanks.
Whether the laugh is the result of not being bothered, or instead a conscious act to put himself into a positive state, either way it’s probably very effective.
I might have to give this a try (although a little quiet inside laugh… I trade overnight and others are sleeping!)
It is Vladislav, I mailed you a lot 🙂 I just love reading your articles, they even feel like the continuation of your book! Such a useful knowledge that we can all only gain ethier thr the our own experience ( the longer and harder way) or thanks to a wonderful man like you ( even tho it is still a long and a hard journey but you make it easier)
Best regards as always,
Thank you so much for your kind words. Much appreciated.
Best of luck with your trading,