Turn Around Your Trading – Part 1

The start of a New Year and resolutions are often part of conversations that I have with fellow traders. If they have had a difficult trading year, they want to get January off to a better start.  Attending to their psychology is one way to make improvements in their trading.

My goal in this three part series of articles is to help you take your trading resolutions and make them stick for the new trading year.

Establishing Control in Your Trading

I speak with traders daily and sometimes they are frustrated, sometimes anxious or confused.  The common denominator is that they experience some kind of loss of control over their trading.  A simple analogy:  I have control over my family budget, an unexpected expense will not be upsetting to me. If I have a repeating problem where that one unexpected expense repeats and repeats in a pattern that I can’t identify, then my emotions take control and I may feel like I am out of control.   In trading, what turns stress into distress is the perception that we no longer control or can’t seem to get anything right.  If I continue to lack control over important aspects of my life, anxiety will turn to distress, anger, frustration and even depression.

Our first goal in a trading turnaround is to regain a control.  Any movement in the direction of greater control will help you feel more optimistic, more energized.  Any exercise of personal power helps dispel the helpless emotions.

Discovering Your Control

A review of the year’s trading results will tell you a great deal about where you made money and where you lost it.  Most important, it will reacquaint you with your trading strengths, weaknesses and patterns.  Very often, such reviews reveal that a relative handful of trading days made the difference between a dismal trading year and a good one.  If so, you want to focus your attention on the common denominator within that handful of losing days.  Can you find ways to anticipate or avoid these patterns?  You also want to focus attention on your big winning days. These were occasions when you operated in a different pattern. What was different in your trading approach on those days?  What was different about your state of mind?  Can you reproduce these?

One trader I worked with overtraded and he tended to give back his gains.  He tended to lose money on trendless days where his mornings started out poorly.  He typically raised his size into the afternoon, which typically turned out to be a flat, trendless trading afternoon.  The result was that he would get chopped up with his maximum size.  A suggestion I made was to stop raising size to maximum on a losing day as this was related to revenge trading and to trade the afternoon like he would a globex trading session. As he stopped the large losing days, he saw the results in his bottom line improve and he felt more in control of his trading.

This example is not unusual among good traders in slumps.  What seems like an overwhelming set of problems is actually a single pattern that repeats. If the pattern can be broken, surprising changes can result. So the first step in turning around your trading is to figure out the pattern. Learn everything you can about the problem and find the right kind of help.  Even if your first step is nothing more than stopping what isn’t working and implementing a pattern that has worked for you in the past. This will begin the process of putting yourself back in the driver’s seat.

Separating you from your problem is the first step toward turning around your trading. In the next article, we will look at other practical ways to improve in the New Year.

Written by:

Stan Nabozny

Stan is a 20 year retail trading veteran, CTA (Commodity Trading Advisor) and Co-Founder of The Art of Chart. His specialties include using futures and options to trade Energies, Precious Metals, Equities, Currencies, Bonds, Softs, Grains and other commodities. Stan believes that Risk Management and Trader Psychology are more important that technical analysis and spends his time teaching and coaching other traders on these topics. Stan uses various trading systems and technical analysis approaches that integrate time and price in his work. See his latest articles here and www.huffingtonpost.com.

07th Jan 2017

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