Stuck In a Hole
If you're like most traders who have tried to hone their skills, there have been times when you've found yourself stuck in a financial hole. Perhaps you thought you could avoid managing risk or maybe you just had a run of bad luck, but whatever you did, you ended up deep in the red. Soon you may have found yourself feeling guilty for letting yourself get so behind, and depending on how much you had lost, you may have felt a little scared. When you feel this way, it's a critical point. If you aren't careful, you can feel overwhelmed. You can start worrying what you will do and how you will dig yourself out of a hole. But if you start worrying too much about what you will do, you will start to panic. And where will you be then? You'll probably dig yourself in deeper. It's better to stay calm, make a sound plan of action, and carefully
and diligently dig yourself out.
When we are stuck in a hole, the first thing we usually do is hope for a miracle. We start to think that if we work hard enough, we can discover a way to get ourselves out of trouble fast. Perhaps a once-in-a-lifetime trade will present itself or perhaps we will have a brilliant insight that will solve all our problems instantly. It usually doesn't work that way, though. What we usually have to do is buckle down, make slow but steady progress and work our way out of the trouble.
That said, it's often hard to manage our emotions when we are afraid. We try to do too much and feel anxious. At the same time, we may feel guilty for getting in so much trouble. But as bad as we feel, we have to remember that feeling bad about feeling bad makes things worse. It would be nice if we were so perfect and brilliant that we never made a loss, but the trading business doesn't work that way. Losses are commonplace. In most walks of life, losing money is frowned upon, but if you are a trader, you must look at things differently. Look at your situation from the perspective of a trader, not from the vantage point of non-traders. All is not lost. Don't imbue losses with special significance. It's no big deal. You've lost. So what? You can make a plan and win it all back.
Another reason our emotions are hard to handle when we have mounted losses is that we react out of a sense of fear. And because we are afraid, we want to trade perfectly to win all the money back. As natural as such thinking seems to be, such thinking is unrealistic. You can't trade to perfection. No one can. When you make a series of trades, you will face many losses (even when you are lucky). The added stress that you put on yourself to do the impossible will be your ultimate undoing. Rather than put unrealistic pressure on yourself, you must be realistic. Take it easy. Think realistically and optimistically. If you put in a noble effort, and work hard enough, you will realize success. All you have to do is relax, trade creatively, and recoup your losses. It may not happen instantly, but if you work diligently, it will happen. So when you find yourself stuck in a hole, don't dig the hole deeper. Calm down, relax, and slowly but surely, dig yourself out.
