Lately the market has been somewhat unkind to me and I’ve been watching profits that took a long time to make erode away bit by bit. I’ve been tempted to gear a lot more than my rules allow in order to quickly make back that which I’ve given away. I’ve also been tempted to just get out, for relief from the intolerable pain of losing. Luckily I’ve been through this song and dance before. I know that both of those courses of action are essentially irrational and will lead only to more losses. The challenge I have been facing over the last few weeks is to simply stick to the plan.

Currently my plan calls for some really advanced hand sitting to take place, which is challenging. I am in position, waiting for the market to give me a signal to either start selling or to start bargain hunting. Neither of these two will happen any time soon though I suspect. I feel that I need to be active and trading and doing something; yet my rules tell me to wait and allow the market to unfold, to give my trades the time and room they need to play out. I am conflicted with pangs of fear about “what if this is it?”, and traces of arrogance around “don’t be an idiot, you should be buying”. It’s a strange and confusing place to be. And this is exactly why rules are so important.

My focus is to stay disciplined and stick to my rules. The last time the market pulled back like this I gave in to fear and liquidated literally the day before the recovery and subsequent push to new highs. I allowed my own fear and the constant stream of news-noise to take me out of the market right when my rules told me to wait.

See, it’s easy to stick to the rules when things are going well and every trade is a winner. It’s when things are not going so well that the rules become harder to follow. Take a trade, stop out; take a trade, stop out; take a trade, do nothing. It’s tough on the soul. I know that I still have a lot to learn, but I think the difference between those traders who make it and those who don’t, is that those who make it over the long term are able to stay disciplined enough to stick to their plan through good times and bad.

I know times have been tough recently, but I’ve seen my rules work in the past and I know that they will work again. Easier said than done, but this has been on my list of things to improve on for some time and if there ever was a chance to practice this skill, the time is now.