When a loss occurs, what should one say to himself? I currently keep a journal of trades, and for the losing positions, I put a lesson learned, but it seems to be not enough. Do you have any exercise I can use when a large loss occurs, such as a mental statement or process? Any book or web site recommendations would be also helpful.
A couple of days ago, I wrote about mastering the fundamentals. One thing I said is the following.
If you practice the fundamentals I preach, you will improve.
When reading the above question today, I remembered something I intuitively know but had forgotten to express more clearly to you– learning and practicing the fundamentals of a thing only builds the foundation for mastering the thing you are doing. Pay close attention here as the nuance of this might just slip through if you don’t.
Mastering the fundamentals alone will allow you to improve, true, but only to a point. You will build a strong foundation, but the work you do after that is particularly your own, and that is the work that will carry you forward. In other words, I can teach the ABCs of trading (the fundamentals), but I can’t teach you about yourself. Only you can do that because you are the only one who knows what goes on inside your head and heart. So, when I tell you that mastering your emotions is a fundamental of trading, I am telling you to put a brick in your foundation simply by understanding that emotions can undo your trading work. Once you understand that emotions can undo your work, you then have to go inside your head and heart and figure out how to “rearrange” your thinking to “adjust” your emotions to the ups and downs of trading.
I could give you this or that sentence, phrase, or word to say to yourself, but the truth is I would be guessing at the thing you need to hear. No, what you need to hear is what you already know. Perhaps it is that you get angry easily. Or perhaps it is that losing lessens your self-confidence. Then again, perhaps the bugaboo for you is that you tend to “ease off” on the trigger when you hit a bad spot. My advice to you is find a quiet spot, still your running mind and beating heart with some form meditation (simply being still and quiet is meditation), and then ask yourself the first question you asked me today – what should I say to me when a loss occurs?
As to the book or web site … The book that helped me understand me is Trading in the Zone, by Mark Douglas. Here is the first line of the book found on the inside jacket – “You may know a lot about the markets. You may even know … when to buy, when to sell, and which stocks have the potential to move. But how well do you know yourself?”
The web site I recommend is this one, right here. Read Dr. Van Tharp or Dr. Janice Dorn. Both provide great insight into the mind and thinking of a trader. Do a site search for either name and you will find more than enough good stuff to help you figure this out.
Trade in the day; invest in your life …
