Have you ever had the feeling that you're just ready to hang up your trading hat and quit? It's happened to many traders at times, both novice and experienced. You are progressing along nicely with your trading plan, then you enter a time period where several losses in a row take away your confidence. It feels like you're getting nowhere, feeling tired of being wrong, tired of losing money.
When this happens, that energy you used to have at the beginning of every trading day is replaced with a feeling of despair, and dreading logging onto your trading platform in the morning.
This is not a subject we as traders want to dwell on, but I felt it worth covering because it can be a reality of trading.
For some folks, there IS a time to give up trading and move on. Some traders try over and over again to be successful but have just never developed the skills to reach a point of competence where they are able to cover their costs and be profitable while trading. In those cases it may be best to take a course of action better suited to the individual, and pursue another type of business.
No one has ever said that learning to trade is an easy task. It is probably the most difficult means of earning income I have ever encountered. But I am a firm believer that if you possess the desire and do your due diligence in the education process, the mountainous learning curve to become a successful trader can be scaled successfully.
So how do you handle the “I'm ready to quit” feeling?
If you feel discouraged about your recent trading results, your first priority is to identify what that feeling is telling you, so you can act accordingly. The first course of action should be to temporarily sit back, take a break, and assess what is happening to cause this feeling of despair. Could it be a reality taking place?
- Perhaps an entry or exit signal that worked for you previously doesn't work in the current market environment?
- Maybe market patterns have changed, and it's time to re-vamp your trading plan?
There may be other market-driven factors causing your losing streak, but what's most important is to act quickly when you've reached the point of despair and sit on the sidelines while you evaluate before losses magnify even more.
Other times discouragement may be telling you that your expectations are too unrealistic.
- Are your profit expectations and max loss exit points appropriate for current market conditions?
If you are striving to make more income by 1) increasing the size of your positions, 2) unrealistic profit and loss expectations, and 3) always wanting “more” out of your trading, you may be setting yourself up for this feeling of wanting to pack it up and move on to another course of business.
There's yet another source which may be causing you the feeling of despair and frustration, and that's “burnout”. Psychological burnout occurs when feeling overwhelmed by the demands ahead of you. This could be because of a change in lifestyle and/or income needs; and you may become so immersed in the stresses associated with trading that other outlets such as social, spiritual, recreational, etc. are moved to the sidelines. While such immersion may be necessary – for a limited stretch of time, it's important never to let that immersion overcome your motivation as to why you chose trading as a career to begin with.
In each of the scenarios outlined above, the trader should treat the evaluation as information to be absorbed and an action plan put in place to overcome the “I want to quit” feeling.
- If it is market-driven, your action should be to re-evaluate your trading plan and recent trade performance to determine if certain patterns or strategies continue to work, or do not work so well in the current market environment. Reduce your trade size until your evaluation and subsequent revision is complete. Or, consider going back to paper trading temporarily.
- If the feeling like giving up is more a function of your own self-demands, then your challenge is to re-set your goals. Make sure that each trading day and week starts with realistic, achievable goals. When football players get into slumps, their coaches will set up plays that have a high success rate to get the players back on track psychologically. Similarly, you want to set yourself up for mental success by setting realistic goals that move you and your trading back on a path to success.
- Finally, if burnout is contributing to the lack of motivation, then your challenge is to structure your life outside of trading by being sure you have enough time for social activity, exercise, and time away from the market and your computer.
Are you a trader looking for an education in options education to perhaps combat your feeling of wanting to throw in the towel? Go to http://www.capitaldiscussions.com. They have a wide variety of programs including mentoring, trading advisories, trading groups, and veteran traders willing to share their trade techniques. When you surround yourself with consistently profitable traders, your own trading can improve.
Feel free to comment below if you have additional thoughts on how to counteract the feeling of wanting to “throw in the towel.”