Fall down seven times, get up eight. Every failure is a learning opportunity if we want them to be. In a high-stakes environment like trading, losses are to be expected. Rewards and returns don’t come with their own set of risks and sacrifices. However, when you keep on losing and fall into a losing streak, the imminent breakdown isn’t far off. The trap of pushing through and still trading even with the numbers glaring at you and saying otherwise also exists.
But there are ways to face and tackle this hurdle. Here are five tips to help you recover from a losing streak and pick you back up and into the game again, in no time.
1. Stop
Stop trading. Drop everything you have for now. It’s often overlooked but this step is the first and most important thing you should do once you’re in a losing streak. Just walk away from your computer. Take a break for a few hours. It will give you a clearer and calmer mind and that’s exactly what you need and definitely not the rush of emotions from the losses. In fact, it will even save you from the potential of losing more and falling into revenge trading or overtrading. It’s a preventive step as much as it is the start to fixing this.
2. Look
Now that you’re not clouded by your emotions, you can start to look. Look at your trades – the losses, the gains, your current status. Review your strategy for the past few trades, beyond where you started losing. Check for any news, anything that might have happened and affected that. Assess the current market condition and the forecasts for the coming week.
3. Listen
Open your ears for feedback. Ask your friends or other traders how they have been. Reach out for help. Find a mentor, if you do not have one yet. Listen to the news and your favorite Youtubers and podcasts. Ask someone you trust to review your losses and your strategy with you. Take in as much valuable information as you can. Most importantly, listen to yourself.
4. Think
With all the data and information that you have gathered, think and process. This is the perfect time for you to reset and ask yourself of your current trading strategy. “Does this still work? Is it aligned with my goals? Will it be the most efficient for me? Is this still even my goal? What do I want to do now?”
Take the time to adequately process your emotions as well. It will be hard to move forward and start trading again when you’re still stuck up with these losses.
5. Cross
Once you’ve laid down everything, you can start crossing the road – but more carefully so. You can start trading again but scale down, for now. Cut down your trading frequency. Trade less. Reduce your risks and be less aggressive – even if that might not be your personal style. The last thing you and your confidence needs as you start getting back up again is to lose some more and get knocked down again.
Refocus your strategy on consistency, even with less gains. Once you’ve recovered, you can start scaling and increasing your trades. You can be more aggressive and work with more risks, then. Just make sure you don’t rush it. It’s a process and nobody wants anything that is rushed and subpar results.
There’s a lot to learn and unpack when one loses and fails. In that process of learning, we often get caught up with our emotions, especially when it comes to trading and the stakes that come with it. All traders have had their fair share of these losing streaks. However, it’s always possible to get back up. We’ve always been taught to stop, look, listen, and think when crossing a street and crossing a hurdle like this is no different!
