How to cope with the drawdown

drawdownYou can have a drawdown because you got it wrong repeatedly and were stopped out. Or you have a drawdown because your trading was bad.

In the first case, you will need to review your analyses if the drawdown is sufficiently large, and find out whether the trading approach can continue to function as it did before. It is possible that new techniques, processes, and ideas may be necessary.

In the second case, however, it is important to find out why your trading has been bad. Is it really because of the markets or because your trading has been done emotionally or on impulse? Have your own rules been broken? If you have been trading emotionally or on impulse. The next step will be to find the reason for that.

More often than not, it is problems in other areas of life that make traders emotionally unbalanced and impair their ability to make decisions. Sometimes a trader is completely unaware that other areas of life may have an impact on his trading. But the emotional aspect may very well cause the effects to be significantly reflected in trading.

Brett Steenbarger

Igor Marinkovic

Electronic engineer, futures trader and property investor and total beginner in making good web sites

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