Module 12 Innerworth — Mind over markets

Chapter 306

Letting Go of the Past

What are your worst losing trades? Do they haunt you? It may be difficult at times, but it is often necessary to forget about the past and think only of tomorrow. Sure, it is important to learn from your mistakes, and to the extent that you can do that objectively and unemotionally, you don’t need to worry much about past losing trades influencing your current trading decisions in negative ways. But there are many traders who hold on to losing trades as emotional baggage. They place special significance on losing trades and view them as evidence for not being able to trade profitably. It is vital for your long-term success to neutralize the influence of these memories. Your past doesn’t need to influence your future. It only has an impact if you let it.

 

During a stressful trading day when everything seems to be going wrong, it is hard not to panic, especially if you are a novice trader. Your emotions may start to take over. You may start to fear that you can’t make profitable trades that day and that you just want to walk away. Your past emotional baggage can intensify these feelings to the point that you start making stupid mistakes and dig yourself even deeper into a hole.

Don’t let past losing trades overpower you at the wrong moment. There is a lot you can do to put aside these past memories and start the trading day anew. Ironically, the first thing you need to do is acknowledge your past losing trades. Don’t pretend that they didn’t happen or that they have no meaning when you actually place a great deal of significance on them.

You don’t have to over-analyze things in minute detail. You merely need to acknowledge that you had some past losing trades and that they bother you. You need to acknowledge that you may place losing trades in the future, but you aren’t going to let that fact hinder you. Here’s what you also need to do. You need to realize that your past need not dictate the future. Believing that the past and future are linked is a common irrational belief that you must refute. Realize that you can determine your future, regardless of your past. You don’t need to let the fact that you made big losing trades in the past make you feel stunned and panicked. Instead, remind yourself that you can take steps to overcome a potentially losing trade.

For example, you can limit your risk so that you will know deep down that it is virtually impossible to have a losing trade in the future that can have any real great significance. You can also make a list of past winning trades that you can pull out and review while in the midst of a current loser to remind yourself that you can overcome your current circumstances by calming down, thinking positively, and taking decisive action. You can tell yourself encouraging thoughts, such as “It’s no big deal. I can endure. I can get through this if I just calm down.” It is also important to monitor your current emotional states. If you feel that you are just too bogged down, it may be a good idea to close out positions and stand aside for the rest of the day.

Knowing that you have an action plan for dealing with an emotional setback can do wonders. If you know that you have a specific plan ready to put into action, you’ll feel a sense of freedom. You’ll know that you are ready for anything. So don’t live life looking backwards. Make a conscious attempt to let go of the past. You don’t need to let past mistakes stifle you. Let it go and focus on tomorrow.

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