Friday, December 1, 2017

Before You Quit Day Trading | Trading Psychology

Today’s Trading Psychology lesson, I want to cover an important topic that most of us have already dealt-with, or will deal with at some point in our trading careers.

Before I get into today’s lesson, I want to remind you that in previous lessons we talked about the difference between stress and distress

I said that stress was performance-enhancing, whereas distress was the opposite.  Stress is the healthy reaction to having money at risk with an uncertain outcome, while distress occurs when our interpretation of that uncertainty becomes much more than just the money at risk on the trade.

With that said… one of the worst types of distress has to be despair, discouragement, desperation, dejection.

Imagine… you decide you’re going to be a professional trader, you work hard for a few years, riding-high on the excitement of conquering the business of day trading.  You read all the books, attend all the seminars, watch all the videos on YouTube, try all the software programs, but nothing seems to get you much past break-even in your account.

Yea, you take winning trades, you have winning weeks, but in the end, the losses keep taking-back all the hard-earned gains and it feels like you’re stuck on a road to nowhere.

At this point, the rush of conquering the markets begins to wear off, it feels like you’re taking one step forward and three steps back each week. 

You’re tired of consistently being wrong, tired of losing your hard-earned cash that you’ve sacrificed time away from your family and friends to earn, and all of a sudden, you’re not excited to get to your desk in the morning.

Even worse, people around you start to roll their eyes when you tell them that you’re trying to be a day trader… 

In this mindset, it feels like the markets and the people around are out to get you, and you just want to quit.

I’ve experienced this feeling of despair before, I’ve even had the conversation with my wife on two occasions when I was ready to give up my dream, and even more importantly, I’ve helped many of my clients deal with the very same emotions.

Before you cancel your data feed and unsubscribe from all your email lists, here are some important factors to consider.

First, our bodies are extremely efficient at giving us signals, those signals are used to guide us closer to happiness and joy, and further away from pain and danger.

When we start to feel this sense of despair and discouragement, to the point where we’re ready to give-up on our dreams, this is most likely your body telling you that something isn’t working, and needs to be changed before you can proceed further in your trading journey.

This feeling of despair is a simple way that our bodies are telling us… “don’t waste any more time doing it THIS way.  Find a better way!”

So, before you give up on your dream, here are three (3) reasons why you’re likely feeling like this, and I have a strategy for you, so you can get motivated to get back on track.


Our Expectations are Unrealistic

When we feel discouraged, it’s often because our vision of success is out of line with reality, which is easy to see possible, when you consider all the crap on YouTube talking about magic trading software, movies coming out of Hollywood where you just need a magic pill, and it seems like everyone knows the next big breakout stock…

When you’re introduced to the business of day trading with these completely unrealistic expectations, it’s not a surprise that 12-months later, you’re feeling like you’re worthless and you’re ready to give up.

A professional trading coach, who has extensive experience in the markets, will help you get a better understanding of what’s realistic, and what’s not, so I would encourage you to find someone you trust before you throw in the towel on your trading.

Chances are… you just got roped-into some unrealistic expectations, and you just need to work with someone who can show you the steps needed to achieve the results that you want.

Yes, it’s certainly attainable, but no, it’s not going to happen without some time and effort on your part.

Our Edge has Disappeared

Another reason why people suffer from despair is that they HAVE been successful in the past, but recently they have seen their set-ups stop working, the markets that once paid them well aren’t the same anymore.

I’ve experienced this many times before.  In fact, I’ve had to reinvent my trading strategy a number of times in my career to keep up with the evolution of the financial markets.

Let’s be brutally honest here, the world never stops turning, people never stop progressing, technology never stands still, and because of that, neither can our trading businesses.

·        “if you’re not growing, you’re dying.”
·        “the only constant in this world is change.”

These are just some of the popular quotes we’ve all heard about the world we live in, yet most of us never truly embrace this environment of constant change.

The markets are always changing, and we need to accept that and change with them if we want to be trading for more than a few years successfully.

I did a lesson on how to break a losing streak a few weeks ago, and that applies to this topic as well.

We’re Burned-Out

In addition to having unrealistic expectations and ignoring a changing market, another reason why traders feel discouraged is because they are simply burned out from trading.

Burnout occurs when we feel like we don’t have enough energy or time to accomplish all the stuff we need to do to achieve our dreams, it leads to exhaustion, and often leads to us making poor decisions, such as walking away from your dreams.

Now…I want to make sure I’m clear on this. 

Burnout occurs when people live an unbalanced lifestyle for an extended period of time.

It’s important for you to understand that in such a competitive world we live in today, in order to be successful, you will need to invest the time to really master what you’re doing, to the point where you have an edge over the other people around you.

When you’re learning how to trade, you need to submerge yourself in the markets in order to develop the trader’s lifestyle. 

It’s a mindset that permeates our lives and everyone we spend time with, but it’s a good thing because it’s exciting and filled with life-changing opportunity.

If doesn’t matter if you want to be a great doctor, attorney, athlete, engineer, whatever… you’re going to need to have extreme focus on developing skills early in your career… but that can’t be forever.

If we’re going to focus a considerable amount of time in day trading, then we need to start adding other elements to make sure that the imbalance doesn’t last more than a few months at a time.

In other words, we can live with an obsession of the markets for a while, but if we don’t start to achieve balance in our lives within a few months, we’re going to suffer from burnout, both mentally and physically.

To live a balanced lifestyle and feel satisfied with our lives, we need work, take time for play, develop spiritual and emotional connections, and feel like we make a difference with the people around us.

I can tell you from personal experience that it’s easy to find yourself in a place where all of a sudden you realize that you don’t spend any time away from your computer, you don’t spend time being physically active, you don’t invest time in your relationships with family and friends, you don’t experience any emotions that AREN’T related to the trading…

…and the BIG one… the only time you feel good about yourself is when you’re hitting profit targets.  This is NOT good!

We can make all the money in the world, but if we’re in physical pain because we aren’t talking time away from the desk seriously, or if we’re in mental pain because we don’t have anyone to share in our success with us, we’re going to start subconsciously sabotaging our own trading, in the form of feeling burned-out.

I have a mantra in my life, and it says…

“I fortune’s not worth a dime without a healthy body, spirit, and mind.” 

I live my life according to that mantra, and I give you permission to use it for yourself as well.

So, we’ve talked about three reasons why people feel like they should give up on their trading…

·        We have unrealistic expectations
·        We ignore a changing marketplace
·        We suffer from burnout

If you’re feeling discouraged in your trading, I would recommend you think about which of these three problems you might be suffering from… perhaps all three of them, because once you know the problem, you can take steps to fix it.

If you’re suffering from unrealistic expectations, as I said earlier, I would recommend you find a professional trading coach, who has a proven trading strategy, that will re-align your expectations of what timeline is realistic in the business of day trading.

If you’re suffering from a changing market, your job is to first, protect your capital by decreasing position size, moving to a simulator if you need to, simplify your entry and trade-management rules, and get back to the basics.

If you recall, I did a lesson recently on how to move from sim to live trading, and in that lesson, I talked about the importance of keeping things simple, especially when it comes to entry rules and trade-management.

It’s also important to remember that some of your set-ups are probably still working, so invest the time to identify what’s currently working for you, and have the discipline to remove the unreliable set-ups from your trading plan.

I would also recommend being open-minded to learning new strategies.  I can tell you from experience that what worked 5 years ago isn’t working as well anymore, which is why it’s so important to ignore the old trading books and videos on YouTube, and so it’s a good idea to work with a professional trading coach who’s having success in TODAY’s markets.

If you’re dealing with burnout, there are two aspects to consider: your trading, and your lifestyle.

With regard to your trading, the most effective way to break through burnout is to dial-back your trading and focus on your most reliable trade set-ups.

Any time I find myself feeling burned-out, I always try to trade ONLY my best set-ups for a few weeks to get my confidence levels back up again, and get that feeling of momentum at my back again.

If you don’t have any reliable trade set-ups, well, then you need to find a professional trading coach that can teach them to you, such as myself.

In regards to your lifestyle, if you’re burned-out, the very first thing I would do is start a daily diet & exercise routine, the second thing I would do is donate an hour of your time twice a week to people who are less fortunate, and the third thing I would recommend is to make it a goal to start spending at least 2 hours with a close friend or family member every week.

The strategy to avoid burnout is simple:  you need to have goals OUTSIDE of trading that will help you push through the times when trading becomes more challenging.

In other words, I need to find ways to feel GOOD about myself, even if I lose money today.  That’s how you push through the hard times in ANY small business, such as day trading.

I know, this time away from your desk will feel wasted at first, but trust me, if you don’t feed your body, your mind, and your soul, you won’t have anything to give to your trading career when you get to your desk the following day.

We need a strong body that is capable of doing the work, we need inspiration to keep working hard for months at a time, and that inspiration rarely comes from our bank account… it comes from the people around us, the feeling we get when we exercise, and knowing that although money is great, it’s not everything in this life.  Once we add that balance back into our lives, our trading usually improves dramatically.

So, hopefully today’s lesson gives you some good insights on what might be causing you to feel discouraged, and some strategy on how to overcome that feeling, so that you can keep improving and getting closer to achieving your dream of becoming a professional trader.

Guys… I hope you found value in today’s trading psychology lesson…

…and I would love to hear from you about additional topics that you’re struggling with as traders.

Do me a favor…drop me a comment below this video with any topics you’d like to see me cover in my next trading psychology video…

…make sure to give me a thumbs-up if you found value, and share it with a friend who can benefit from this information as well.

It doesn’t matter what market we trade, or the strategy we use, even the best traders battle with their emotions when there’s money on the line.

And don’t forget, you can find me every morning @ 8:00am EST in my trade room with all of our members here at, I have a great free trial on the homepage of our website, I publish my Nightly Newsletter every evening on my blog before 8:00pm EST, and I’m excited to see you again soon on my next trading psychology lesson.

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1 comment:

  1. Thanks Joseph for your great lesson and newsletter!

    Really learned much practical knowledge from you.
    And recent Trading Psychology videos really helped me rethinking the whole trading process and those strong irrational impulse inside me.

    Also miss those days you analyse DAX. :)

    Thank you so much!!!


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