Overcome A Large Trading Loss

I’ve recently received emails from traders who have experienced large trading losses like I did many years ago: like me they built up their accounts over time and then like me they lost all of their profits and more in a very short period of time.

After I’d recovered from the pain of blowing my account and a wonderful long holiday travelling across Spain. My trading mentor, I didn’t know he was my mentor at the time, he was very clever at letting me think I was a genius, suggested I take the four steps offered below, they work.

1/ Refocus, but on what?  Focus on the present and all the opportunities that the markets offer us every day, let go the past, it can restrict many traders from reaching an optimal trading state. Focus on what’s within your control, like your behaviour for example, you can re-wire you brain for the better, if you focus on behaving, thinking and acting like the trader you aspire to be, silence that inner critic!
2/ I strongly suggest you stop trading, take a break, take this time to work out what happened, most of the issues will be psychological. Make radical changes to your approach to markets. Trust me you will return an improved trader.

3/ During your break, develop your skills as the observer of your behaviour and thoughts, doing this means your brain will function more from the pre-frontal lobe, the CEO of the brain. Practise monitoring your thoughts everyday and when you start to experience a negative feeling, ask, “How do I want to feel?” and “what do I want to believe about myself”

4/ Ask yourself the following questions writing your answers down in a good quality note book; What type of trader do I want to be?  What do I have to change about trading?  Whom do I know or what resources can I find to help me develop this working model in my mind? What is the highest level ideal of myself as a trader can imagine?

All four of these steps would not have been so highly effective if I hadn’t decided: to take responsibility for the loss. I understood that I hadn’t followed my trading rules, because I craved instant success, at that point I had not developed the skill to stick to my plan and avoid the temptation of instant gratification.  I had taken too much risk, and that I was employing trading methods clearly that did not work. I stopped blaming outside “manipulators” of markets or bad luck for my losses. I took ownership of that fact  that I had got it wrong, however scientific research proves, we can re-wire our brain and be a totally different trader from which we were previously!

Initially this wasn’t easy for me, because my body was addicted to neuro peptides, my body was used to this chemicals being released, I was addicted to drama, I decided to change that but as I said before it wasn’t easy and it takes time and practise. However it was a better option than continuing to lose money in a state of denial and feeling awful physically and mentally. Depressed feelings are a normal response to loss: the loss of money, the loss of dreams, the loss of who we think we are. Sometimes we have to hit rock bottom before we can change and come out the other side as a different person and trader, who has learned from a painful the experience and has made significant improvements to the old model.