I dealt with the following situation…
Yesterday, I had early profits, but it was so early I was still in my 100% trail mode. That initial move was it, nothing else. And so, between the market hitting a top for the day and me getting occupied with the Daily Meeting and two coaching calls, I missed an opportunity to profit. This resulted in a $1000 swing from peak unrealized gains to total loss.
In other words, had I unrealistically taken the early morning profit of $600, I would be $1000 higher in my total equity. I know it is unrealistic to think this way, but I like to get fumed over not having a better plan.
The best I can do is log and journal and see if there was an opportunity to have made a better decision where at some point in the day, I could have left with a break-even trade.
Dealing with the psychological challenges that arise from trading is a critical aspect of becoming a successful trader. The situation I have described—where you had unrealized gains that eventually turned into a loss—is common and can be emotionally taxing. Here’s how you might approach this from a psychological perspective:
Acceptance of Uncertainty:
- Understand that trading is inherently uncertain. Every decision made in the market is based on probabilities, not certainties. You had a plan in place, and even if the outcome was not as expected, it doesn’t mean the decision was wrong at the time.
Journaling:
- Continue to journal these experiences in detail. This will help you identify patterns or areas of improvement and serve as a therapeutic way to process emotions. Over time, you might see that certain scenarios repeat, providing you with data-driven insights on whether a tactical change is needed.
Reframe Your Perspective:
- Instead of viewing it as a missed opportunity, consider it a learning experience. Acknowledging what you learned from the trade turns a negative outcome into a positive lesson.
Avoid “What If” Thinking:
- It’s natural to think about what could have been, but avoiding getting stuck in that mindset is essential. The market will always have ups and downs, and hindsight is 20/20. Remember, there will always be another trading opportunity.
Seek Feedback:
- Discuss your trades with a trusted mentor, coach, or trading group. They might provide a different perspective that you hadn’t considered, and this external viewpoint can be invaluable.
Establish Clear Rules:
- If you find yourself consistently in situations where you’re questioning your hold-or-sell decisions, it might be beneficial to set clearer rules or criteria for when to exit a trade.
Mindfulness and Emotional Regulation:
- Practices like meditation, deep breathing exercises, and even physical activity can help manage the emotional highs and lows of trading. These practices can assist you in staying calm and making decisions based on logic rather than emotion.
Continuous Learning:
- Use this experience to review and possibly refine your trading strategy. Remember, no matter how experienced, every trader will have losing days. What differentiates successful traders is how they learn and adapt from these experiences.
Lastly, give yourself some grace. Trading is challenging, and even the most seasoned traders face similar situations. The key is to keep learning, adapting, and refining your strategy based on successes and failures.