A good baseball player in a hitting slump never gives up, he keeps swinging. No matter how hard it is or how much the pressure mounts he must keep trying to make contact. There are stories galore about athletes who hit major slumps but keep at it until they break through. Steve Cauthen, famed jockey of 1978 triple crown winner Affirmed found himself in a horrible losing streak shortly thereafter, never hitting the winner's circle for 110 consecutive races (he claims divine intervention broke the streak, substituting on Father Duffy). In the early 80's, Northwestern's wildcat football team went on an unenviable and unlucky streak of 34 consecutive losses, a record still in place today. Yet, they came out for that 35th game and turned it around - they didn't fold up their tent and go home as many would have done (and who could blame them?)
As traders, slumps are common. They can be a function of poor luck or perhaps a system that needs adjusting. We are all too aware of when we have a drawdown in our accounts and it affects our mind, which has bearing on how we move forward. Who can stand a beat down day after day? One would think the odds favor at least a turn up during a bad streak, but alas we remember the odds on a 10th coin flip are always 50/50 ever after seeing 9 straight heads (coin being fair, of course).
But how do we shake the downturns to create some positive movement in our accounts? It's not easy, but let's start with amnesia. My good friend and colleague Doug Kass from RealMoneyPro talks about how the market has amnesia from day to day, and we must also have amnesia in our own performance. Forget about it and just move on. Easy, right? Hardly!
If you drown yourself in your sorrows of losses you will eventually dry up your account. I often talk about exercising patience in trading, it is critical now to do this! Give yourself a chance to win by forgetting the bad (as hard as that might be) and just start fresh each day. One way to do this is taking a short break away from the trade and coming back with more vigor and energy than before. I do this often (take a walk, go to the gym) and it is a great help to my mind and body.
However, when I'm back in the game I continue to trade - always ready to take another trade because if I cannot then it's over for me. We're not talking over-trading here, rather NOT being scared of getting back into the game. Tom Sosnoff, founder of Thinkorswim and TastyTrade tells us all the time to take the next trade. Michael Jordan once said, You miss 100% of the shots you don't take. Indeed! Keep swingin', you'll make contact - and when you do....!!
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.