Common questions people asked me on Twitter. Simplified for brevity and Twitter consumption.
1. Cliche but true – What is the best way out of a hole? STOP DIGGING! You should cut your daily limit or shut down until you are clear-headed. You must fight the immense strong emotion to “bet bigger & make back.” FIGHT IT!
2. You should review trading until you know the source of underperformance. Then you must create a battle plan to address those issues. If you notice a boat has a hole in it, do you keep sailing? No, you can’t leave the dock until it’s plugged. Study what outperformers are doing well and how to adapt to the current market.
3. MINDSET – DO NOT COMPOUND HOLE! HIT EASY SINGLES! You should revert to the highest % setups. No homers. Lock in green days. You need the POS feedback loop (more on this in the future). Some traders keep losing but say, “I am trading only high % setups!” Statistically impossible, something is wrong then.
4. Avoid high variance and weaker playbooks. You should focus on POS streaks. All of your review work should be focused on the EASIEST win! Forget playbook growth, forget tech improvement. Your sole job each day is to obsessively find and hit the easiest single while doing no damage. For most day traders, that means NO OVERNIGHTS!
5. DOUBLE DOWN BEST PRACTICES. Make sure you look after your sleep, diet, and exercise. Journal in the mornings. No f’ing around. Don’t you dare touch alcohol or go without sleep. Usually, hyper-selectivity is king during this. Identify what worked for you best with past tough patches.
6. TRUST IN The PROCESS, DON’T RUMINATE ON THE HOLE! ACCEPT THAT PNL IS A LAGGING MEASURE OF NEW ADAPTATIONS! You won’t get out of the hole overnight. Embrace the struggle. Your ability to deal with the hole is what makes great traders so great. Accept that it is part of the job. That is why we are overcompensated.
7. DEVELOP SAFEGUARDS TO PREVENT ISSUES IN FUTURE: How could you have adapted sooner and prevented the snowball? What rules can you put in place to limit drawdowns? Every hole should be a learning opportunity. Don’t let one trade go by without the takeaway. You paid the tuition. Make sure you get the lesson.
8. MOST HOLES COME FROM ONE THING – COMPLACENCY!! When traders don’t put work in, PNL eventually follows (lagging indicator)! Traders in a good stretch drop the habits that led to outperformance, then they underperform. They also don’t change with the changing market and are often not putting in the time.
9. NEVER LET YOUR GUARD DOWN AS A TRADER! MY MOTTO IS – CHERISH THE GOOD TIMES. THERE ARE BAD DAYS AHEAD! PUSH THROUGH THE BAD TIMES. THERE ARE BETTER DAYS AHEAD!
10. Trading is a game. Life is a journey. Don’t take holes too hard. Everything is better in the rear-view mirror. Life goes on. Stay healthy. Many have failed, and many traders blow up. Everything is there to make us better and chisel out our best selves.
Post Tags: life trading