Dealing with Disappointment
Last week a good friend of mine was really down in the dumps. Superb sportsman with great passion for any activity that involves some form of competition. But sports like so many other aspects of our lives comes with it's ups and downs and this particular moment he had experienced a down moment. He had trained hard and focused on obtaining his goal of being include in a team but was unable to make the cut.
You can imagine the level of disappointment he felt, so much so he started looking at life in a rather negative light. There's really not much else to say to someone other than you're sorry for their let down. You can never truly appreciate what they feeling unless you are placed in the same situation. But this got me thinking about trading and the many failures we face on a daily basis dealing with so many issues which remain unresolved.
I can recall the first trade I won and how elated I was with myself about pulling off a great feat but then came the losses and my level of morale took a dip which was inproportionational to the elated feelings of a win. Bear in mind that with absolutely no experience of trading psychology the basic functions of the brain take over. If you were observant enough you would find how the negativity begins to overshadow your sense of logic and suddenly fear creeps in making you prone to executing your plan the way it was intended.
There was a constant need to win every trade and the second I did immediately this sense of being capable of trading overcame my rationality. Then the loss which entailed me becoming in the most foulest mood and feelings of a "third force" beating me. I couldn't stand it nor understand it which ultimately lead me into disappointment. Why was I losing?
Trading and life are intertwined and much of what we do in our trading lives mimics real situations we deal with in our own life. Everyday is not the same as yesterday and there are absolutely no guarantees. Hard work is rewarded sometimes not always and we have to have the drive and passion to produce a consistent approach so as to enable us to keep on track.
Here's a few things I've noted over my journey so far and how I approach Winning and Losing:
- The market is in charge and it decides whether the move happens or not. If you sitting at your screen and feeling frustrated about the lack of or vociferous movements its wise to remember that the market is solely responsible for these and theres nothing you can do besides trade your plan and plan your trade.
- You are going to lose, let me repeat that, you are going to lose. Trading is about probabilities and there are times when the conditions will not reward your strategy. This is why it is critical you have your risk management under control so that when those moments arrive you aren't scrambling around for opinions on whether to rid yourself of the position or simply hold it.
- Losing a trade is not always a reflection of your ability as a trader. Just because you got stopped out only to see the price recover from that level towards your target doesn't mean you are an incapable trader, it simply means this time you got it wrong and must move forward.
- Losses often signal change of conditions. Most often the condition which has changed is seen after the fact has happened however if you are aware of responses of your strategies to market condition you can pick up a change of condition.
- Social media is full of traders who consistently publish winning trades but never the losing ones. Beware of these traders. They are distorting the picture and creating a desire from new traders to match those expectations which are false. A true trader is not fearful of publishing losing trades as they are his greatest source of learning.
- Don't let the fact of a drawdown increase your need to find opportunity. Be patient with the market and opportunities will present themselves.
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