When your specific trading methodology quits working due to a change in the market environment, you are in a losing streak, or a drawdown in trading capital. There are things you can do to lessen the emotional and financial pain.
- In losing streaks, trade smaller and smaller until you start winning again.
- Trade less; only take your best set ups and entries.
- Take stops faster if you are shown you are wrong quickly.
- Take profits while they are there if the market becomes volatile.
- Look at the next highest time frame if the price action becomes erratic in your time frame.
- Have wider stops with smaller position sizing so you have time to be right, without being shaken out.
- Be patient and wait price clarity.
- Reduce your total risk exposure by limiting open trades.
- Limit your risk exposure with options versus stocks.
- You may need to switch to the selling strength short, instead of buying dips.