On a Losing Streak? Take a Step Back and Take a Break

Stevie Swai

I find trading psychology to be the most fascinating and possibly the most important facet of trading for me personally and we don’t address it here on this website nearly enough. It’s great to talk about great set ups and winning trades, but what about losses? What about losing and even losing streaks? It does not do justice to our readers to try and convince you that we don’t make mistakes or worse yet, get on losing streaks. Now, I’m speaking for myself, because I have considerably less experience than Scott, therefore I still find myself on rocky roads from time to time. He has pretty much overcome losing.

But as this site is striving to appeal to young traders, let’s face it, you wouldn’t be here and reading this if you were super successful, I will step up and talk about this because it needs to be discussed and I need to share my experience, whether it turns anyone off or not. You will all, at some point, lose. So let’s talk about dealing with that.

So what’s up with me? Well, obviously, I’ve been rather absent from this site over the past couple of months due to a big project I’ve been working on. I won’t go into details, but it was trading related and by far, the most stressful situation in which I’ve ever found myself. The earning potential was there, but I made the mistake of agreeing to work on commission. Never a good idea as the psychology of trading for someone else greatly differs from trading your own account and if you don’t understand this beforehand, you could find yourself in a bad position.

I found myself in a tight spot when I had some positions on that got caught in that ugly market sell off in early February. Rule #1 stick to your plan. I had planned to daytrade only to reduce risk but got off course. What happens when you get off course? Well, what would happen if you took your boat, which you’ve only sailed on lakes, out on the high seas with choppy waters and no navigation system system? Then maybe throw in a huge storm. Get the picture? So stick to your plan and what you know. If you don’t, you’ll end up losing, and losing begets losing. It really does. Even the best traders get on losing streaks which keep trading psychologists like Van K. Tharp in business.

And when you’re losing, everything you know about trade set ups, having patience, etc goes right out the window because you get desperate to make back losses. You can become someone you don’t even recognize as a trader. Now, I apologize for painting a bleak picture, but this is part of the business folks. The key is figuring out how to handle it before you get into too big of a mess.

One answer is to take a break. That’s what I did. I figured I wasn’t getting paid anyway which was an incredible stressor, so I just stopped dead in my tracks, closed all positions and had a marathon evening of  watching Season 4 of The Walking Dead. Sometimes you just have to shut things down or as I like to say, “I need to burn the house down so I can rebuild it”. And as I’ve rehabbed many properties in my life, I can tell you that’s it’s far more expensive to restore than to rebuild and when you are in a losing position as a trader, you must just stop, take a break, do something to restore your confidence and then come back with a new frame of mind. And you may need a day, a week, a month, or a year.

It’s funny, Last night I was feeling as tho my confidence had been undermined in a huge way leaving me with an indescribable weariness. I really just wanted to give up. It couldn’t be ending like this.

So, I got up today with no intention of trading. Yeah right. You can take the trader out of the market, but you’ll never get trading out of the trader. Traders trade. Anyway, I had all my screens up, but was doing other things like looking up the cast of The Walking Dead.  I was so relaxed. More relaxed than I had been in the past 3 months, quite possibly, the past year. I had no obligations, no expectations. Just me and IMDb. Then I saw MYSZ signaling a move. On my personal account, I quietly and calmly put in a buy order, then within minutes an order to sell for an almost 30% profit. Then effortlessly did the same thing with CNET just moments later. And to top it off, A position that I’ve been holding in FBNCQ for quite some time had a nice move and is now up 5 times from where I bought it.

I ended up having a great day and the bonus was I got paid and regained a bit of confidence. I needed that. There’s nothing like winning trades to build confidence, but sometimes to get them, we must step back and just relax and not want it so badly. As Scott often says, “just let the trades come to you”.

Will I trade tomorrow? I’m not planning on it. I’m rather enjoying the break, and so far my break has been surprisingly profitable but I’ll let you know.

Happy trades!





    • Haha! Thanks for that. Gotta keep the humor. How’s your trading been going these days Dave? I’ve been out of the loop.

  1. Hi Stevie. My real estate bus has been slow so I’ve been trying some spring trades with mixed results, usually not giving it enough room and closing out too early. Also foolishly went long a spring on a big down day in the Averages, but still just a scratch, slowly absorbing this stuff. But I am impressed with the buying into weakness advantage of very low losses, mostly scratches plus or minus. I am determined to get this, it may take some time, but I’m determined … Thanks for your articles.

    • Hey hey, so glad to hear it. It’s a tough biz, but very possible to do well. I had the same problem you had with springs on down days. They’re not very springy LOL! Keep up the good work. There’s no better mentor out there than Trader Scott. Of course, I’m biased but honestly, I don’t know where I’d be without him. Every time I get off track of what he’s taught me, I fail miserably. Then I climb back on the horse for a do over, remembering everything I’ve learned and then I do great. Keep us posted on your trades. We love to know what people are trading especially if it’s a symbol Scott wrote about to watch in the pre-market comments.

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