What a way to start the week!
But we didn’t necessarily know this at the open… so let’s step back to 09:30 and trade.
The obvious conversation that will follow…
“But Lance, I can see quite a few trades there. If you look at….(indecipherable as I’ve stopped listening at this point)”
“Ok, thanks. But I wasn’t blessed with magic hindsight goggles like you.”
The session loss was small, due to most trade losses being cut at less than full size.
Easily overcome by an average winning session. In fact easily overcome by one good trade.
So it was an easy decision to step away and take the loss.
Difficult for someone still in the ego stages of development, where their self-worth is completely dependent upon them saving the day and trading their way to profits.
Easy for someone who takes a longer timeframe perspective.
Someone who recognises that the fight back from drawdown DOES NOT need to occur in the same conditions which created the drawdown.
Someone who recognises that the fight back from drawdown DOES NOT EVEN need to occur on the same day which created the drawdown.
I’ll fight back. Believe me.
But it will occur at a time and place of MY choosing.
And it will be easier, because I ensured the session loss was locked in early, before it got out of control.
I want to take you back to a prior article – One Week – Five Innings – Show Me How Good You Are.
It’s a simple way to take a longer timeframe perspective.
From the prior article:
I want you to consider a slight mindset shift. That these are not discrete and independent games, but instead they’re each one-fifth of a larger game. A mindset shift that takes some of the performance pressure off individual days. A mindset shift that allows you to more easily cut a session early, at a small loss, so that grossly unfavourable conditions do not destroy the whole week. A mindset shift that allows you to more easily put aside frustration and disappointment from a poor performance, because it’s only one fifth of the real game and you’ve got time to correct it.
And the same goes for other days. No matter which day offers poor conditions, Monday through to Friday, your goal is to keep any losses SMALL so that they’re easily overcome by those other days which profit.
Losing days will happen. Keep them small.
This will take a while to truly accept, so be kind to yourself along the way.
But it’s a mindset shift that can once and for all stop these single session meltdowns that destroy weeks of otherwise good trading.
Accept that the fight back from drawdown DOES NOT need to occur in the same conditions which created the drawdown.
Accept that the fight back from drawdown DOES NOT EVEN need to occur on the same day which created the drawdown.
If you’re struggling to adapt to a market, cut the losses then and there. Keep it small.
This was only one innings out of a five-inning game. You’ve got time!