There are some things we can control as traders and some things that we can not. We need to learn the difference to limit our frustration and win in this game.
We can control: How much we risk per trade. How big a position size we take. What time frame we trade. What market we trade. Our style of trading. Whether we stick with our trading plan or go off of it. If we honor our stop losses and trailing stops. How we react to a winning or losing trade.We can not control: Whip saws when the trend reverses on us. Gaps in opening prices both up and down. Headline risk. Natural disasters. Whether a trend continues or reverses the moment we open a position. Whether any individual trade wins or loses. How many winning or losing trades we have in a row.
The battle for your long term trading success is won or loss in your head. The decision to whether keep going after losing money or to quit is made at the point of maximum frustration with the markets. To keep going you have to keep positive, and keep trading. Knowing the difference between you making a mistake or the market simple not matching your style will go a long way in keeping down your stress and negative self talk. Here is an affirmation for traders based off the serenity prayer used by AA.
I must learn to know the difference between the things I cannot control; discipline to control the things I can; and the knowledge to know the difference. Taking one trade at a time;
Enjoying one winner at a time;
Accepting draw downs as just the reality of trading;
Taking, small losses and big wins,
trading the market as it is, not as I would believe it should be;
Trusting that trading a robust system will be profitable in the long term;
That I may be reasonably profitable in my trading,
and supremely happy with my capital appreciation.
Forever trading. Amen. -Steve Burns