I want to begin by saying that a trader has one thing to control. Just look in the mirror - it's that simple. You can draw all the lines and read all the news you want but in the end, if you are not “in the Zone,” you will struggle.
When not in the zone you must decide whether to run and hide or taper down your size and tighten risk in general until you can again feel more confident and start trading your system well. Having said that, I experienced a somewhat strange but obvious mental block that resulted in poor execution and frequent disappointing outcomes for a period of about three weeks.
My approach initially was to reduce size and tighten risk while I muddled through that time-period. Then one day I woke up and realized that I had inadvertently or unknowingly changed my risk/stop loss methods and had essentially sabotaged my technique resulting in lackluster performance. The day I realized my errors was like an epiphany that resulted in my announcement to some of my trader friends that I was back. I was ready to regain my confidence and experience much better results. You might say it was a swing back to confidence rather than anything else but there was an obvious thing that caused my block. That is why I feel a trader must review past trades weekly, if not daily to see what went well and why or vice versa when trades are not working.
Yes the markets were turbulent but regardless of that they were very tradable and almost better than usual as the moves and volatility provided wide ranges that could have resulted in excellent profits. The next month saw a very large turnaround for my trading.
I wanted to share this in hope that it would help anyone who has or is in a trading slump. Hindsight is a wonderful teacher use it to your benefit.
Below are some Basic tips that may help:
1. To review your trades efficiently, create a journal or a spreadsheet listing your buys, adds and sells. Then print out the daily and weekly charts of each stock.
2. For each stock, write down the main reason you bought. If that’s hard to do, then you probably haven’t done enough research. Hopefully you didn’t buy on a hunch or emotion alone, as doing so carries greater risk.
3. Next, create a winners pile and a separate losers pile and analyze the charts to see how each stock fared after you traded it. Factors noted should include how your stops would have or did work and eventual target's to name a few.
4. Use a trading diary where you can record emotions during and after a trade and to note times when you added to a trade that had a positive or negative outcome for example.
5. Always have a set of basic rules that you follow based on the findings of the previous 4 items that you do not violate.
There are many more items to list but this is a basic start. You can build on it as you wish and as you further develop your trading.
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