“I’ve had an absolutely awful day today”, “The DAX has been horrific”, “Worst day ever!”.
I cannot stand social media posts like this. I have a pretty short fuse for it unfortunately. Not only is it just another form of whinging (which I can’t stand), but it’s a clear sign that you’re doing ‘trading’ wrong.
Here’s the thing guys and gals….
Trading should not be stressful. If you’re having a “horrific” day then you’re overtrading. Simple. I’d bet my trading account on it.
Overtrading can mean different things, but in a nutshell, it means you’re taking on too much risk.
Money is relative of course. If I lose £100 and you lose £100, we both may have different feelings about that amount. My point being that you have to find what’s right for you when it comes to risk.
But the reason why most people experience these stressful times in their trading is because they focus on profits first, not the risk. It’s the greed kicking in.
Of course, we want to make the most money we can, so we are sucked into overtrading. We pick our maximum risk per trade based on what profit we might make, when what we should be doing is focusing on how much can we stomach to lose.
If you’re having a bad day and you are feeling stressed out by it, or wanting to vent in my Facebook Group, my advice to you is to go and consider your risk first. It’s a rookie mistake and your gut is a clear warning sign that you are punching above your weight.
When you turn down the risk dial on your trading to a level that sits within your tolerance level positive things happen, including sticking to your system throughout the inevitable bumpy periods.
Listen, you will have periods of losing runs. Its going to happen. Best thing you can do is prepare for it correctly by setting your risk at the right level now. If you don’t you will fail to tolerate the inevitable losing run you will go though. You will come off the rails, you will system jump, you’ll be stressed out.
Trading should be enjoyable.