Every trader gets to experience slump during the course of trading. As a trader, you will find out that nothing works and every strategy implemented seems like you are digging yourself in a deeper hole.
This experience is quite frustrating and many traders end up expressing feelings like anger and depression especially if the slump drags further on. It is common for traders to try and cut corners or act maliciously in order to get out of the slump.
For a long time, you were used to making wins from different outcomes which boosted your confidence and skills. Everything was ok until the slump hit. The question is what are the best ways of getting out of a trading slump?
Journal Your Trades
As a trader, you are focused on the outcomes which result into wins when the strategies workout in your favor. During this time, your self confidence is high and you can boast about your knowledge and skills. Now that the trading slump has hit you, you need to get out. One way of doing so is by keeping a detailed journal of your strategies and winning outcomes.
How does this help? When in a trading slump, you can review your detailed journal and learn where you went wrong. Your journal will allow you to keep track of all proper trade decisions made plus the profitable setups enabled.
With this at hand, you can finally remind yourself about the good moves in the past which will help to boost your ego. Now that you have identified where the problem is, you can act on it.
Start by being conscious of your trade decisions. You can take note of your thoughts and feelings when trading as this will help you to understand what you are doing wrong and identify the causes of your trading slump.
Take A day Off To Reflect & Reset
This is the most difficult decision any trader can make. Majority of traders can’t imagine being away from their trading computers and systems but when the trading slump kicks in, one has to go along with this difficult decision. Trading is unlike other jobs where you are required to be present in order to be paid once you have met your targets.
Traders do suffer from anxiety which is a normal feeling that indicates how your body is dealing with stress related with trading and one’s inability to meet their expectations. Since anxiety is not conducive to good trading, taking a break will help to reset the mind.
What you need to do is close down your trading computers, leave your home office or firm and do something different not related to trading. Become a risk manager for yourself and engage in a hobby that will take your mind away from trading finally giving you a new perspective.
Evaluate Your Strategy For Current Market Conditions
It is common for traders to panic once they experience three losses in a row. This is so especially for new beginners. Many will end up searching for new additional indicators to be used as filters or alternate indicator in order to trigger a trade entry or exit.
This is not the way to go about resolving trading slumps. What you need to know is that if your strategies have been working for you in the past but recently, they have failed you, do not be too quick to abandon them.
Since you have been keeping a detailed journal of your trade strategies and have recently taken a break to reset your mind, you can now evaluate your strategies for current market conditions.
Your evaluation should look into the real cause of the trading slump. Was it a trade error or a lapse in discipline? Once you have evaluated your strategies and identified errors, you can put up plans, minimize recurrence and move forward.
Be Content With A Small Win
This is another difficult thing for traders to come to terms with – being content with a small win. Traders both new and experienced always dream of making huge profits and no losses.
When you hit a trade slump, being content with a small win will allow you to re-strategize and survive through the ordeal. Furthermore, it will help to improve your self confidence and reduce any further risk.
You can increase your profit size when confidence and consistency has improved to new levels. Increase your profit levels gradually until you reach your former position.
Traders who have hit a slump usually find themselves in a position where they get to doubt themselves regarding their ability to achieve their trading goals.
It is common to find traders getting rid of their strategies thinking that they don’t work anymore. There are ways to get out of a trading slump and they include keeping a detailed journal of your trades, taking a break, evaluating your strategies and taking home small wins.