Part of the trading journey is in understanding and dealing with your own mind. Personally I go through periods when I simply lose interest in the markets.
In this post I will identify those reasons and develop a strategy for dealing with these reasons in an attempt to ensure they do not affect me for too long.
I lose interest for a number of reasons;
1. I've incurred a loss
2. I've had a consistent run of winners (I've dealt with this in another post)
3. I have a lot of other stuff on my mind
4. I'm run down
Incurring a loss
Incurring a loss is all part of trading. Knowing this, doesn't actually make it any easier to deal with this loss! No trading system is right all of the time. Anyone who has traded for any period of time understands this. But if your system has been extensively back tested (or indeed forward tested), then you should have a feel for what kind of Win/Loss ratio the system 'typically' experiences.
If you are currently encountering losses that 'conform' to your expectations and yet you still have trouble placing more trades, then perhaps your personality is not suited to your trading system? For example, your system has a W/L of 40% and your testing showed that at this W/L the system was still profitable - perhaps you need to consider a system that delivers a better W/L ratio. I for example, would struggle mentally, to trade a system that had W/L expectations of less than 50%, simply because my personality is suited to small but regular gains. After a series of losses it is wise to step away from the market's completely and ensure your frame of mind is positive before returning. The opportunities will always be there - even if you take a week off to do something else! Don't beat yourself up, just accept this as part of trading and get your head in the right place before returning.
I've had a consistent run of winners
I've termed this subconscious profit protection syndrome - this is certainly something that I suffer from! A previous post explains how I have identified and am dealing with this.
I have a lot of other stuff on my mind
We all seem to rush about at 300mph these days, and most of the time we are able to cope with juggling lots of balls at the same time. Sometimes however, it all becomes too much and a couple of the balls drop to the ground. This is perfectly natural in today's fast paced society. I deal with this in a couple of ways: Firstly, I accept that my plate is rather full and somethings going to give - this is normally my trading. Why? well that's simple, my day job pays the bills at the moment and together with my kids has to be my priority. Secondly, I re-visit my daily disciplines. Have you ever sat in front of the PC and simply not known where to start? Do you look at your list of favourite stocks from the previous night? Do you search out new trading opportunities? Do you update your blog? Do you work on a new strategy that you have been considering? If you have a set list of tasks (together with time estimates for each task) it becomes so much easier to perform these tasks.
I'm run down
Trading doesn't require the mental or physical fitness of a fighter pilot, but if you are feeling run down, there's no doubt that even the simplest of daily chore takes much more effort! Take some time off from trading until you are feeling better. Eat lots of veggies and drink lots of juice!
My challenge over the next couple of days is two-fold;
Update the daily disciplines to reflect the revised strategy
Eat lots of veggies and drink lots of juice.
