Yesterday after an aborted MRI on my back I hit the office to review some of the work on our desk. One of the steadiest of trainees had a miserable trading day. I am not sure I can remember such a day of red from this new trader. In his daily review he wrote:
Today is probably the worst I feel like I have traded in a while. I really don’t think I did anythingright today. I think my main issue in everything I lost in was just not getting in at good prices,which led me to think shorter term about the trade, which made me use bad stops, and aftergetting stopped out, trying to get back in which led to over trading and more losses.
wow! this is a bad day for you.ok lets do thison monday lower your tier sizeonly make your best tradesthink about the plays you are most comfortable itmake only those tradesif you put up a positive open make sure you lock that inlets just do everything we can to put up a positive day on monday and erase this day from our trading memory
A common response from a new trader is to undervalue the significance of such a negative day. They undervalue the change required to stop a bad day from becoming a bad run. A bad day is just a bad day if you take proactive steps to end it. Shrugging it off as just a bad day without change often leads to a trading slump.
It is not the end of the world to have a negative trading day but this was such an unusually awful day for this trader. No sense in sugar coating the results. They were astonishingly terrible for this trader. And he needs to take immediate action with the steps and then some that I suggested above. It is not so much the losing money it is the red flag that his process is failing him.
If you put your hand on a hot stove that will be the last time you do that. You check the stove next time you approach and you never put your hand on it again. Why don’t new traders feel the same sense of urgency with their trading? You get burnt by the market and it reaches in to take money from your trading account, then do not let it happen again as best as you can avoid it.
This is not being overly conservative as a trader. This is called being professional. Making an adjustment of a professional trader.
Bella
2 Comments on “Don’t get burned by the market”
Personally, days like this are some of the best opportunities I learn more about myself (not just as a trader). What were my emotions? How did I feel during the trade? After the trade? What was I thinking? Of course no one likes to lose money, but how do I improve for tomorrow? What can I learn from my mistakes so I don’t make the same ones in the future? How do I control my ego/fear? The true test is how you respond to set backs. To me, that’s how character is built.
Personally, days like this are some of the best opportunities I learn more about myself (not just as a trader). What were my emotions? How did I feel during the trade? After the trade? What was I thinking? Of course no one likes to lose money, but how do I improve for tomorrow? What can I learn from my mistakes so I don’t make the same ones in the future? How do I control my ego/fear? The true test is how you respond to set backs. To me, that’s how character is built.