tactical trader

In this, the second in a series of articles, Adrienne Toghraie introduces talks about how you can get ‘back in the saddle’ after an event throws you off your trading course.

A trader experiences many things during the course of their career. An event in a trader’s life may be positive or negative, but it can throw them off of the course of following their trading rules if early care to plan is not taken. How an individual handles getting ‘back in the saddle’ after such experiences can determine whether or not they will continue to be in the trading profession or become defeated. Examples of this are given below.

A system that is no longer effective in the present markets

Do you have a pre-determined level established to know when you should re-evaluate your system or change it completely? The average life expectancy of most good mechanical systems is about two years. It is important to take time to have a periodic review three or four times a year to adjust your system to the changing markets.

It is likely that you will not have to develop a totally new trading system if you modify your trading approach to adapt to the changing markets. With periodic reviews, you will be able to return to trading refreshed and confident with your new and improved system.

Drawdowns

How much drawdown can you handle before you completely blow up your account or create negative emotional anchors that bring about more losses? Ask yourself if the drawdown that you are experiencing is the result of your system failing to work or you failing to work the system.

If your system is not working, re-evaluate your business plan. If you are not working the system, get some coaching. Acknowledge the temporary setback that is in alignment with your rules and take the next trade as if there was no drawdown. If you are trigger shy when taking the next trade, perhaps you need a day off to re-acquaint yourself with your business plan. Take time to test your system and re-establish confidence in it. To get back in the saddle, motivate yourself with a book, tape, film or seminar…