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What to do when things don’t go as planned as you might’ve noticed, you’ve done all the chart research, you’ve position sized where your entries and your exits are. It’s a beautiful setup. You can see yourself putting the trade on and then sailing off into the sunset with all your new financial abundance and then something happens and things don’t go as you had hoped. So what do you do? Well, this happens a lot. You’re in a strongly trended move and for no particular reason, the thing sells off against you very, very sharply. So that’s happened to me enough times, so I don’t these days get emotionally invested in the outcome of any one particular trade. People always say like, well, I feel happy when I’m making money. I feel bad when I’m losing. If I lose a few times in a row, I feel really bad start to question my whole existence, and I always like to think of it from a very sober way of doing things In that you have to focus on your process and stay out of the results.
If you put out a trade on and then immediately start looking down at your p and l, you might be into the action. You have to dissociate yourself from the money. The money is just points in the video game, right? You’re playing space invaders. It happened this week in a couple of things in the past week. I mean, look at Friday’s action in August Gold and in July silver they got taken out back and shot. They’re very difficult to trade. When you’re dealing with three to 6% moves in futures, it’s very, very difficult and if you don’t have experience with those markets, I want to be careful to share with you they’re not for the amateur kind of crowd, be very, very careful. Those markets are super volatile and the contracts are big and you can see very big swings in your equity. You know what I’m saying?
It also happened in Nvidia. I’m sure many, many people watching were in doing their pre-split kind of trade looking for things to go well, Thursday the stock was up between one and 2% and then news hit the tape that there was going to be some kind of antitrust thing going on. Stock sold off $60 in about 10 minutes, which kind of breaks everyone’s heart because it’s a real crusher. When you’re in the middle of that and you’re kind of looking forward to holding it through Friday, then Friday’s going to be the split. Monday’s going to show the new trading and this and that, and so all you can really do though is manage risk in the here and the now. So many people, especially with Nvidia, are thinking three months out and you can’t really manage risk three months out because three months out as the future and the future doesn’t exist. All we have is the ever evolving moment of right now and now and right now, and so you

Can about where you want to be and the goals that you want to hit and what that’s going to look like in the future. So that motivates you today to take the actions that you need to achieve those goals. I don’t think you need a written plan. Written plans for trading is a bit of a waste of time. If you want to build a business that’s probably a little bit different, but all you really need to do is to have a dollar and a dream, put the trade on and figure out what step number two is going to be after. That’s why I advocate putting in alerts or putting in protective stops so that you know exactly what to do if certain inflection points occur in the marketplace. And you can do that even if you’re a short-term trader or not, and certainly swing trading.
Scalping, scalping, you’re kind of already on top of the market, so it might be a little overkill, but try it on for size. I mean it can work. The key is that what I’m trying to say is you have to understand that unexpected events go with the uncertainty That’s called trading, right? We deal with probabilistic outcomes. Every once in a while there’s going to be some outlier event that kind of hits you broadside. Some people, I am not really big in social media. I don’t really have an emotional need to share and I don’t need people’s feedback on my own actions. I’ve got that down to a science confident in my own behavior, and so it is possible that these outlier events can happen. They can take you out back and give you a crack upside the head. They obviously suck. It’s happened to me so many times that you’re kind of like, okay, well that’s trading.
You can bellyache about it, but I don’t really know too many really, really successful traders who bitch all the time. It’s just part and parcel of what goes on when you’re managing risk. You have the two, as I like to say, there’s two payoffs to every trade. There’s the financial and there’s the emotional. You have the financial risk and reward, and then you also have the emotional risk and reward. And living with the uncertainty is a huge part of making money. And I think the more uncertainty that you’re willing to feel and endure, the more money you’re going to make. I’m not saying be a reckless gambler and be a risk lover. I’m just saying that being able to live with the uncertainty and the probabilistic nature of the outcomes of trades, the more you can get comfortable just being in that spot and saying, okay, here’s my goal.
Here’s my setup. Every time I see a setup, I’m going to put the trade on. I’m going to stick with it. I’m going to make money. I’m going to lose some money, but at least I have an idea of what the probabilities are. And then my sole purpose in life at that standpoint as a trader is to just follow those rules or trade that setup and not necessarily worry about any one particular outcome of any one particular trade. If I’ve learned, I don’t want to say I’ve learned the hard way, but I’ve done enough living to know that if I get my hopes up on something, they say expectations have built in disappointments and I don’t like that myself. So the way I avoid it is I just don’t get my hopes up on any one particular trade. I put the trade on. I have an idea of how it’s going to go over many, many decades of experience, and that’s really what I focus on.
If I do feel good, it’s because I can just replicate my discipline day after day after day. That’s what I take solace in. I don’t really care about the outcome of any one particular trade because I don’t care about the tickers. I know what a lot of the tickers are and what the companies do, but most of the time when people send over tickers, the students that I have, they’ll say, Hey, was this is my setup on this chart? I just want to make sure I’m doing it right and I’ll take a look at it Half the time, I don’t even what the hell the companies are. If it’s like a $6 stock, I’ll be like, why are you trading penny stocks or something like that, but that’s what they pay me to do.
Or they say, I’m really frustrated because trading on two minute bars every time I get in, I got knocked out. So I say, well, if it’s gone on long enough, extend, look at intraday, maybe 30 minute bars. Look at swing trading. Try to extend your holding period and trade smaller this way you can stomach the swings. You might also be underfunded. And so that kind of goes with it. Either you’re going to have to deal with the big swings, your account is underfunded, but you want to get out of the complaining part. So really just understand that these things are going to happen. There’s going to be once in a while where you get your heart set on something, the outcome of the trade, for example, and all the money that you can make and it’s not going to work out. I will say this though, there have been trades that I’ve been on.
I don’t know about the frequency. I’d have to look that up. So I don’t want to just say something. I could be inadvertently talking shit when I don’t want to do that. But I sometimes mention a period of time where things were just completely cooking for me in oh 5, 0 6 and I couldn’t lose. It’s like I had the Midas touch and it wasn’t me per se. I am a reflection of all my thoughts, feelings, and actions. And I have a paradigm, the sum total of all my habits, it just happened to be an 18 month window of time when my trading style was very amenable with what the market was showing. And so they say, you make, Hey, when the sun shines, I was printing cash. It doesn’t always happen that way, but if you stick with it, you absolutely will have the tail events on the other side. Now, in that period of time,

I made hundreds of percentage points within a nine month window trading sugar, gold and copper. And if you asked me when I put the sugar trade on early on, I put on a bunch of contracts and then I was waiting to add to my next, my fourth risk unit, and that took almost six weeks. And every day I was putting my order in, buy at 12, buy more, buy more at 12. And it got to the point where it was selling. It wasn’t selling off, but it was at the lower end. It had kind of entered a trading range, but I was up and I stayed with it. And then the thing, it ended up going and breaking out from 12 and kind of not going directly up. It kind of went up and then went parabolic until it went to 18 or 19, and all I had to do was sit on my hand.
So I do promise you might’ve had a tough week last week, depending if you’re trading some of the medals. Copper got copper sold off gold, sold off, silver sold off. The soybeans have sold off. The Nvidia was doing well until the news of the antitrust thing, despite the news of the split. So it might’ve been a tough week for some of you, but it will turn if you are persistent and determined, it absolutely will turn. And if you stay in your winters long enough, you will find that they go up and they go up and up and then the slope of the line will change, and then you can’t have a chance to go parabolic. So you kind of have to take the thick with the thin, but don’t be discouraged. It’s just the natural order of things. They’re going to be surprise attacks and keeping your losses small. They say your first loss is your best loss. Once you get out, you can think with a clear head. You don’t have to worry about it.

The post When your trading doesn’t go as planned first appeared on MartinKronicle.

The post When your trading doesn’t go as planned appeared first on MartinKronicle.