I’ve been reading your excellent posts for a while now, and have enjoyed the learning experience. Having said that, I’m struggling with “gun shyness” after losing big last year (through my own stupidity). It was suggested to me (through a subscription service) to get into a calendar spread a couple of months back, and I analyzed the spread “perfectly.” By that I mean that I formulated a plan to implement the trade, including enough information to enter GTC orders for entry, profit-taking exit, and final exit, but I couldn’t bring myself to actually put on the trade. In hindsight, my numbers were spot on and I “woulda, coulda, shoulda” made $3.5K without breaking a sweat.
I’ve had a futures trading account for almost 20 years now, repeating the same pattern of a few small to medium wins and losses, a big loss, hiatus, trepidation. Obviously, if I stopped doing stupid things, I’d eliminate the big losses, but what would you suggest to get over the period of not trusting myself?
As in any system, a finite number of elements exist. In the trading world, the system I write about, a finite number of problems exist. Inevitably, then, since most folks write in to me about the problems they are having, we will go over the same ground from time to time. From an educational viewpoint, going over common problems more than once can be helpful for everyone, as it can both enlighten those who have not considered the issue before, and it can reinforce what one is trying to learn. The question below has been asked in various forms, but since confidence is key to trading well, it is worth repeating what I told one reader a while back.
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?
Your issue is confidence, or a lack of it. Get it back, If you have been trading for twenty years, it is in there somewhere. Find it. Although I agree a hiatus is a good thing after a losing streak, it can also become a way to run from your real problem. Do what I suggest above, but instead of asking yourself “what should I say to me when a loss occurs …” ask yourself, “What are the stupid things I do, and how can I eliminate them?” Better yet, ask yourself, “If know this game, and I can pull off wins, why the heck don’t I trust my abilities? What is my fear?”
As in life, repeating bad behavior takes us further down the road of getting bad results. You are repeating your trading pattern, which is still, after twenty years, bringing you bad results. My advice to you is do something, anything, differently. Simply, BREAK the pattern, and, perhaps, your confidence will return.
Trade in the day; invest in your life …
