Every systematic trader has done it. You put in a trade that your system tells you to trade. The trade hits your stop so you get out. Like any good systematic trader would do. Then the market moves in the opposite direction. That urge or regret or whatever feeling you have at that point is wrong if you are a systematic trader. The right feeling is I followed the system so I made the right trade. Many traders get discouraged by market direction. The direction of the market should not leave you feeling discouraged. If it does then you don’t have enough confidence in your system.
How can we prevent the discouragement of market direction in our trading?
First we need to understand our goals. What is the goal of trading? It’s obvious it is to make money. How do we make money? Another obvious question it’s by making trades that gain not lose. Ok we are doing good 2 for 2.
I tried trading on my own for several years.
This is what I found most of the time:
- I was wrong and I lost money.
- I risked too much.
- I did not get out soon enough.
- I made all the wrong trades at all the wrong times.
- I held losing trades to long and winning trades to short.
That was me trading.
Overcome the discouragement of market direction with a trading system.
Then I discovered what it is to trade with a system. This was very liberating. I could take 30 years of data and test this system. I could literally get 30 years of trading experience in a matter of months. I would take a year at a time and watch what my system did over that year. That test built confidence in my system with no money at risk.
I then started testing it live and saw that I got the same results. Time and time again the system has proven itself. So now I’m not discouraged by market direction. The fact that I lose in some trades doesn’t bother me. Of course I’m human so I do like it better when my accounts are going up than when they are going down but I don’t abandon the system when they are going down. Why because I know what it did from 1985 to 2017. The trading system has proven itself over time.
My trading without the system is worse that the slot machine.
If you have a trading system that has stood the test of time then don’t worry about the one trade that went in the wrong direction. You know that the next big trend is around the corner.