When the market goes against you

If you are day trading, whether it be forex or futures, you will invariably have those days when you feel like the market is going against you. Whatever you do, things go wrong, the market goes in the other direction. You enter long and the market goes down. You exit this position, enter a position in the other direction, and voila: the market reverses direction and you are losing once again.

What should you do?

Actually, the best thing to do on those days is to quit smoking for the day. You see, the most important part of trading is psychology. You can have the best teachers, the best indicators, the best platform, etc. – the most important part of trading is your head, your reactions, your psychology. The market will go up and down, sometimes at the pace you want; sometimes it will be too slow or too fast. It’s nothing personal about you. You have to face the market as it is. The most important factor in trading is your head, your instinct, your patience, your psychology.

When you have a position against you, that is natural. Successful trading is always a matter of statistics, and no strategy will be 100% winning. But sometimes one of those positions leads to another, and you panic and act without a clear strategy. If you are losing one position after another, you are most likely panicking. You don’t profit from panic.

If you feel that the market continues to go against you, stop trading. Take a day off, or a week, and analyze what you are doing. Take a deep breath, get out of the panic and try to figure out what you were doing wrong or what you can do to avoid making the same mistakes. Everyone has their own trading style, but you can benefit from talking to experienced traders and discussing your mistakes. If you haven’t taken a good trading course, spend time learning. When you trade again, you’ll have a renewed attitude and peace of mind, which is the most important part of trading.

Don’t panic trade. Have a good trading plan and stick to it. If things are getting out of hand, it’s time to stop trading and regain confidence.