Sometimes trading with a winning edge is a matter of being able to identify those key moments when you don’t have it. As much as we would like to always trade with a peak performance mindset, it isn’t possible. There are those times when our game is off, and we would be wise to stand aside until we are rested, relaxed, and re-energized.
Consider the plight of Dan, a novice trader who is having a bad day. He started the trading day optimistically, excited about meeting the challenges of a new day. But after the open, he made a few losing trades. Suddenly, his enthusiasm turned to disappointment. He decided to keep trading, but he just couldn’t stay focused. He kept worrying about the errors he had made and the money he had lost. He soon felt tired and exhausted.
When your mood is down, it is wise to consider standing aside for the rest of the day. Many trading experts suggest monitoring your mood, and when you feel down, in a rut, or disappointed, you should close out your positions (that need immediate attention), and stand aside for the rest of the day. Some traders start every morning by monitoring their mood. Unless it is at peak levels, they don’t trade that day. They don’t trade until their mood returns to normal.
It is vital for long-term survival to monitor your moods frequently. When you are tired, for example, you may not have enough energy to monitor your trades carefully and make sound decisions. You may feel on edge and may act impulsively. Similarly, when you are feeling disappointed, you may allow even a minor setback to intensify your negative mood. Depending on your personality, and your ability to get up unscathed after a fall, it is often wise to just cut your losses, admit defeat, and retreat to trade another day. After you are rested, relaxed, and ready, you’ll find that a brand new day looks more promising. The more you can learn to stand aside when necessary, and approach trading with a fresh outlook, the more profitably you will trade in the long run.