You are up and in the green this week. The mojo is flowing and you have just really been in the zone lately. Feels like everything you touch turns to gold. You almost feel…invincible. It’s an amazing feeling and you sit back in wonderment sometimes that you are able to simply click a couple of buttons and get paid for it. All this is a trap within your mind that is slowly being laid out for you to fall into. You are getting cocky, your ego is getting too big for its britches.
On the other side of the coin, instead of kicking butt you’re receiving the butt kickings. It feels like everything you are doing is wrong. The few wins that do come around are joyless and don’t seem to make up for the couple of L’s you recently had. You start becoming emotional, perhaps reaching lower lows mentally. You might even start personalizing these tickers, trying to get revenge upon them. You might start second guessing, now you are getting gun shy. Doubt about your trading abilities seep in, maybe you don’t have what it takes here.
The bottom line is, balance. Striking a balance of living in reality. Not euphoric, not living a fantasy driven by your diva-like ego of “I’m smarter than the markets!”. Also we aren’t falling into the doldrums of negativity with our self defeating criticisms and horrible self abuse we inflict upon ourselves. To focus on hitting that perfect mental balance of, not too high and not too low.
I have a good idea when I’m in this balanced area by how I react to a win and how I react to a loss. If I take a loss, I should be fine (mentally) as long as I followed my system rules. If I have a win, I shouldn’t have prolonged elevated (false) views of myself and my trading. We are playing in a game where a random loss is not just a reality, but simply apart of the game and inevitable. To have the thought, behind every win is a future loss and behind every loss is a future win.
So take note of how you feel after an L and after you get a W. Stay modest with a win, stay positive with a loss. Tips to staying modest after a series of wins: get it out of your system. Do a fist pump, do that happy dance. Then put it behind you, don’t cling to it. That win if celebrated too much can turn into a loss (or series of losses) if you build it up too much and let yourself get big headed. Live in the now, stay grounded. You must know and commit to memory that the exact second you’ve lost in the market is the exact second you think you really have it all figured out this time.
Tips for being positive in face of losing: I always ask myself 3 questions and if I answer ‘yes’ to anyone of them, I give myself permission to let it go and dwell on it no further. The first question is, did I learn anything from the loss? The second question is, did I follow my system rules and/or guidelines? The third question is, did it make me tougher or more resilient? Again, if I can give a confident resounding ‘yes’ then I shrug my shoulders and I know I do not need to let this get to me. This comes from a person who struggled with losing for years with trading, I went through a lot of losing streaks too. I was tested, big time.
Focus on balance. Not too high, not too low. Either too much losing or too much winning can draw us into mentally unhealthy extremes. Keep your antennae of emotions up and aimed at yourself at all times. If you find yourself bragging all day about those series of wins you’ve been tallying up, watch out! If you find yourself rationalizing why you should throw in the towel and quit trading for good, watch out! Know thyself and do not let yourself fly too high of up in the sky but also let’s not be fearful or sad about this silly little game either. Seriously though, know thyself.
