Reset Your Trading

Anytime is a good time to take a step back and review your trading. I would suggest doing this on a regular basis, but if you have come back after the summer break and trading is just not working, take a step back, reflect, review and change for the run all the way into Christmas.

The first thing on your mind if your trading is not going as planned is to change your strategy but I would suggest broadening your scope of re-evaluation, start with your mindset. Your mindset and the work you put into it will affect every part of your trading, so this bedrock must be firm and thought through to make you a successful trader. Trading is personal to each induvial and is a reflection of your emotional state, so you have to work with your emotions and recognise them. Anyone telling you to ignore or bury your emotions whilst trading is wrong and you will not be successful.

Working on saying your emotion out loud and recognising what you are feeling will help you understand your frame of mind in each important moment of trading or even before you start. For example, if you had an argument before trading, say ‘I am angry’ understand what that feels like and make a judgement if trading today is the correct idea. This may sound foolish but only 36% of people are able to accurately identify their correct emotion1, so it is a skill set you must work on.

Leading on from this, try writing down your beliefs about trading. This will lead to some principles you can take away and apply to trading, for example, if you can’t sleep because you have a trade running overnight then close out (in principle) before the end of the day. These core beliefs will lead to principles and rules and then habits and finally results, as you are not conflicted, as they are your beliefs.

This approach will stop the cycle of blaming your strategy for the losses or the ups and downs but staying flat.

Strategy – Make Money – Lose Money – Change/Tinker – Doubt – Throw Out – Repeat

Does this sound familiar?

There is no Holy Grail strategy!

As you can notice we have not even discussed trading yet, but all the above so far will directly affect how you trade and your results. We will move on to discipline which is another key factor to a successful trader, if you are disciplined in your trading life, and how you go about your pre-market routine, this will filter down to disciple within trading, so you will become less likely to move your stop etc. The discipline on routine also helps you to follow your trade plan and focus in on what you must do in your plan only! You feel 10ft tall as you have control, you can regulate emotions, respond in a controlled manner and make deliberate decisions, leading to steady growth in your trading account.

Reset your aims/expectations, do not think you will be a millionaire in a few months or even years. To have the aim to leave your work is a great aim but the first step is to make a small amount of money and KEEP it. (withdraw it from your account) This mindset of small gains and keeping the profit will make you one of the best traders in the world as not many people can 1. Make money, but 2. More importantly, keep it. So, in the next 3 months aim to make a small amount of money relative to your account, with a small trade size and reset and finish the last 3 months in profit. Then KEEP it! Have strong risk management and little drawdown. You will not believe how a small victory in the last 3 months of 2019 can change your mindset. This will set you up for 2020 and as previously said in this article, it will switch you from being money-oriented to process-driven and striving to be successful over the long term and consistent.

Trading has to be a slow and steady growth like a business; with everything in life, it takes time and steady process with some false starts and many mistakes. Only in very rare occasion do you shoot for the moon and get there in 1 shot, and if that is your thing looking for that adrenalin shot that is fine, but go to Vegas or play the lottery. Trading is not that sort of industry!

To move away from money, consider looking at pips/R rates rather than money, the most successful traders are not completely concerned about money. They are concentrating on their process and accumulating wins, and when I mean wins, I mean keeping to my plan today ‘a win’ not moving my stop a win’ and this leads to successful trading.

Learning Patience within trading will also be one of the best steps you can take. Using the filter analogy again, if you are patient in planning everything out then this will filter into your trades. A patient person will take deliberate decisions and not rush. The market can be fast-paced and the convention is trading is upbeat and frantic. Therefore, you have to be reactive and flexible on occasion but if you have patience then you move better under pressure and know when to apply a pause to make a correct decision.

The final thought is just something to consider – a Journal. Write a mistakes sheet and every time you make a mistake write it down. Putting it on paper firstly takes it out of your mind for that trading session, and then you can re-evaluate it later on. Plus writing it down, will help you not to do it again. Then have a trading plan, this will give you structure to apply all the mindset aspects and your strategy will thank you for it.

[1] From “Emotional Intelligence 2.0”, Travis Bradberry and Jean Greaves