Thursday, January 14, 2010

Are you in a Trading Slump?



You are now an experienced trader and your results are not that volatile, you are disciplined but you still don't understand why you are experiencing a slow and irritating draw down.

Relax, Trading is clearly a state of mind apart from all the other things that it already is!
I have some interesting observations about this. I play Chess on a leading Chess server that has a range of players that I can play against. I usually choose players at my own strength or slightly above (for that extra challenge). I am always surprised at how the charts of my performance behave as if they are price charts. Forget the patterns (its even more bewildering,) even just the price movement mirrors the state of mind. Many rising waves last a good amount of time, and similarly slumps last an extended period sometimes.

What this explains to me is that the human mind moves in patterns and trends and it takes a while for one to end and the other to start. So make sure you preserve capital while you are in a slump, try different things and you will be on track again after a while and then the whole profitable should hopefully last for good time.

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