Rules save trading lives

Sometimes the market makes you feel an unusual amount of despair. It’s the little things that can get to you. Making a mistake can wipe out lots of profits that you spent weeks building. That event then influences you in a way that you don’t fully understand and it leads to a spiral of bad trading that crushes your soul and damages your pocket book.

This is what happened to me recently. I have said before that trading is a lonely game; when things like this happen there is often nothing that anyone else can say or do that will make you feel better. The fact is though, that the only way for you to get out of that rut is to break the cycle of negative thoughts that circle around in your head. I know that I am not alone in this feeling of despair, as I know that many other traders have also had a tough time over the last four weeks or so. Not that this gives me any comfort. Quite the opposite really.

I’ve been thinking about this a lot over the last few days, and I’ve been through periods like this before. I know that the only way to get out of the negative spiral is to find things to be positive about. So here is my list of things to be positive about:

It’s been tough, but I’m still in the game

Even though the market has treated me poorly over the last four weeks, I am still making progress. I am frustrated that I have given back profit, but on the whole I am still able to generate profit from the market. In other words, I still have faith in my own ability to make money from the market.

I have a lot to be grateful for

This year has been one of immense personal growth for me. I am becoming a better trader with every trade that I take, even though not all of them are winners. I have also started a company and fulfilled my dream of trading from home. Moreover, I have an immense number of people who care about me and love me.

I have learned many lessons

The simple mistakes that I have made might have cost me in Rands and Cents, but I have learned some important lessons from them. Albeit lessons that I keep learning. I think that being knocked down to size by the market is good. It keeps me humble and hungry for improvement and growth.

I know that this is temporary

I’ve said this before… everything in life, the good times, the bad times, all of it is temporary. The only constant is that everything is changing, always. The market might have treated me badly now, but soon it will feel easy and effortless again and I will get my own equity curve on the up again.

I know rules save lives

I have been stopped out of a bunch of trades in a relatively short period, but I stopped out. This means that my rules saved me from further pain. I know that not all trades always work out, and that in probabilistic terms a series of losses in a row is rather likely. So, all in all, I am glad that I have risk management rules and that they work.

I think the overall message is that even though at times markets are more difficult than others, it is the ever-changing journey and never-ending learning that makes trading worth it. Every now and then we need some bad times to help us root out bad habits. I am grateful for the bad times, because they are the best teachers.

Happy Trading!

Petri Redelinghuys