How to Survive the Fluctuations of Your Trading Account

The balance in your account sometimes feels as volatile as the markets themselves 😅

Mistakes arise from a lack of confidence, patience, and/or desperation. When we change the way we view our process and the world, the process feels less chaotic.

Here are some key perspectives that help me maintain a more stable and neutral mindset.

Evaluating Expectations

Ask yourself when and why you formed the expectation you have about trading. Is it possible that when you formed it, you didn't have enough context and are now making life difficult for yourself?

Anticipation of Results

Sometimes we feel like the market owes us. Because of this anticipation, it hurts a little more especially when it doesn't happen on our timeline. Detaching from an immediate outcome helps to have more peace with the consequence.

The Illusion of "Drawdown"

When your account is in a drawdown, it feels like you're falling behind. Here's a different perspective...

Trading isn't the result of a single trade. It's the result of a series of trades. You have to participate many times to get a better idea of how you're really doing. You need to reach trade 25, 50, 100, etc., to better understand. If you know this to be true, then there's a price to pay until you reach that number of trades.

Unexpected Distribution Model

The idea is to know roughly what your return expectation or probability of success is. This can be investigated by backtesting your system. The key is to surrender to the reality that it's IMPOSSIBLE to know in what order the trades will occur. After enough trades, you can start looking at your statistics.

Wanting to Change Your Strategy

A fatal mistake is wanting to keep changing strategies. Typically, traders find a strategy that works, the problem isn't there. It's in discipline and getting enough repetitions. In this case, most traders who jump from strategy to strategy couldn't even trade it with discipline for 25 consecutive trades MINIMUM… Do that first, evaluate your process, and then you can have more context.

Struggling with Doubts

Temporary losses can lead to doubting your skills. Most doubts come from recent moments. It's a psychological phenomenon. Recent memories have more impact on emotions. It doesn't indicate that it's more or less important. Review the DATA. Emotions can lie to you, but the numbers you document won't.
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Identifying Your Risk Threshold

It's possible that you're simply risking more than you can handle. Imagine the feeling of having a losing streak. What percentage of risk could you lose 5 times in a row without wanting to change something? That's your magic number.

How do you define a successful trading day?

For me, everything is based on discipline in the process. If that's done well, we're good. A system executed perfectly is the most important thing even if the day ends in monetary loss.

Define these topics well for yourself. It's worth the effort.

-El Mago 🧙🏽‍♂️

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