Contributed by Jitender Yadav
Losing in trading is different from losing in other area of life in the sense that in other areas if we just continue our efforts and persevere we may make a comeback. In Trading; if you are making losses and continue to stick to it and persevere you’ll lose more and may be all that you have. Those, who don’t give up in a losing trade, will continue to let the losses run or worse, will average their losing trades, this is sure recipe for disaster.
Losing is devastating for a trader’s confidence as a lack of confidence can infect every Future trade. So a trader must rebuild his confidence.
I am presently reading The Playbook by Mike Bellafiore. In this book the author has suggestion for traders who are going through a bad phase. According to him if you are feeling like a bad trader, you should make the game easier. And how can you do that-
First lower your tier size- While some trading coach/experts suggest paper trading, it may not work for most traders as paper trading does not involve real money and hence the real emotions that come with it. So to rebuild confidence a trader should trade with real money but with reduced tier size which may be 1/3rd, 1/4th of the normal or whatever one is comfortable with.
Trade your best set-ups – A trader has many types of set-ups in his arsenal but when he is going through a losing streak he must have patience to wait for and trade only his one best set-up.
Trade your best time frames- Although traders do trade many time frames like intraday, daily or weekly etc. but to rebuild confidence he must come back to only his one best time frame.
If the above does not work than the traders should take a break to review his strategies, get in sync with the markets and get a fresh perspective.