Being in denial of one’s trading problems is the most dangerous stage of the trading journey. At one point or another, all traders go through this ‘denial stage’ with their trading problems, and how fast they get through it or if they get through it, is what determines when they get on the path to profitable trading, if ever.
It’s widely known that the first step in improving yourself is simply admitting that one has a problem .
If you cannot bring yourself to admit to your problems, you will never conquer them and move past them. Unfortunately, not admitting to your trading problems can be just as disastrous to your trading account .Being in denial of your trading problems means that you will continue to make the same mistakes, over and over, until you either lose so much money you are forced to stop trading’.
In today’s lesson, I am going to put forward a ‘Trader’s 6-step Program’ that will act as a guide to help you cure your trading problems and hopefully get you out of the trading rut you might be in right now…
Step 1 – Admitting to your Trading Problems
Time to swallow your pride. Check your ego at the door. You need to realize right now that the longer you go on trading in denial of your problems, you are going to continue struggling and losing money. I know you don’t want to struggle and lose money in the market, so you need to do this.
You’re going to get out a piece of paper and a pen, don’t do this on the computer or ‘in your head’…you need to physically write this out or the exercise won’t work properly:
You will write: “I, ‘Rahul’, am admitting that I consciously make the following trading mistakes repeatedly…”
Mistake 1 – My discipline is bad. I rarely stick to my trading strategy. I take trades that make no sense according to my method. I over-trade and I know it, now I am finally admitting to it.
Mistake 2 – I have no trading plan. I know I should make one, but I always put it off. I am finally admitting to it.
Mistake 3 – …….
You get the idea, you will fill in your own trading mistakes here and list as many as you can think of. Be HONEST with yourself and swallow your pride, or this will not work. Get everything out on paper and save the paper, you can make it part of your trading plan.
Step 2 – Take some Time off from Trading to Cool Off
After having finally admitted to your trading problems and getting them all out in the open, you need to take some time away from the markets to reflect and get back to an equilibrium state of mind.
Especially if you’ve just experienced a large drawdown from over-trading and making stupid trading mistakes that you would not admit to previously, you need some time away from trading. This time will allow you to reflect on your trading mistakes and to really ‘own’ them. During this time, you should be thinking about and planning ways to prevent these same trading mistakes from destroying your trading account again.
Step 3 – Make a Plan of Action
So you’ve admitted to your trading problems and you’ve been thinking about them, now it’s time to put a plan together so that you actually make a meaningful change and don’t commit them again or fall back into your old ways.
For each trading mistake that you wrote out in Step 1 above, I want you to get a second sheet of paper out and write out a corresponding way that you can eliminate that mistake.
For example, if one of your trading mistakes was not having a trading plan, then you would write down that you need to make a trading plan and commit to doing it.
After you write down all the ways that you will fix your trading problems, you need to get to work on actually fixing them. It’s not enough to just say or write down that you will fix your trading problems, you have to make a conscious effort to do so, or nothing will change.
To be Continued.