Plunging in trading is inevitable. They have ever-changing market conditions, and even successful traders go through them.
I once heard the story of a trader who hadn't had a negative month for 48 consecutive months. During that time, he earned an average of $2,000 a day. Then all of a sudden, his winning streak came to an end, with a prolonged downturn in which he couldn't make a profit for two consecutive months.
During such a stressful time, it can be easy to pull yourself together and focus on what you're doing wrong while losing sight of the things you've been doing right. It's part of being human!
When you focus on all the negative aspects of trading, there is a tendency to ignore the positive aspects that have brought you success in the past.
For this reason, I think it's best to focus on using your strengths during a depression. Back to basics as they say!
On the other hand, when the trade is going well, your attention should turn to improvements that can still be made.
Doing so will help you maintain a proper level of trading confidence. Remember, low self-confidence can be just as harmful as overconfidence!
Here are steps you can take to stay positive when trading is tough:
1. Don't simply focus on the problem, take action.
As I mentioned in an article on correcting bad trading habits, you should try to be more aware of your trading decisions.
You can do this by speaking out loud while trading or documenting your trading decisions. Writing down your thoughts and feelings during trading can help you identify what you're doing wrong so you can kick those bad habits later.
2. Look at those deals that have worked well for you.
Having a detailed trade journal should come in handy at this point, so I hope you have one!
By keeping track of the good trading decisions you've made and the profitable setups you've taken, you'll be able to determine which ones are working for you. Also, reminding yourself of some good things you could have done in the past will help boost yourself.
3. Find your trading niche.
Niche trading is about specialization and focusing on what works for you. You see, some traders underperform because their personalities and trading styles don't match.
To avoid this, ask yourself the following questions:
What am I good at?
What are my strengths and weaknesses as a trader?
What are the qualities that will make me successful?
You may also want to take our Epidemiology Institute personality quiz to help you find answers to the following questions: Which currency pair should I trade? Which trading style is best for me? Which mechanical system suits my personality?
Remember, even if your account balance turns negative, one of the biggest challenges in trading is staying focused and positive.
By making sure your confidence stays intact, you'll have a better chance of getting out of the slump.
Remember to focus on the process and not just the profit!
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