Link: Losing Confidence and Gaining Perspective

Jul 28, 2007: 4:14 PM CST

I know last week’s price action was rough for many traders – shocking to some – and many traders may have been extremely frustrated or lost confidence because of trades that took them under in the rapidly declining market.

Dr. Steenbarger addresses traders who have lost confidence in a two-part post:

Part One:  Gaining Perspective

Part Two:  Changing Your Self Talk

So much of ‘the trading game’ is mental, especially for home-based or retail traders.  In other words, much of it is ‘in our heads.’  We can’t force our will on the markets, no matter how much we try, and we are forced to be observers and partakers in price action that is seen and felt by us all.  We choose when to enter, how long to stay in a particular trade, and when to exit – either by ‘too much pain’ or ‘sufficient gain.’

In the first post, Dr. Steenbarger addreses the difference between “trading wrong” and “being wrong” and notes steps to address both.

In the second post, he addresses how the ‘internal dialog’  we have with ourselves can be either detrimental or helpful, and that it is important to recognize what we are telling ourselves and change consciously  when we need to do so.

Without going into further detail here, please read both his posts if your find yourself struggling mentally this weekend.  Take a breather and come back level-headed next week.

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