Randy Howell explains how traders can stay confident after losing trades. He argues for a probability-based mindset instead of seeking certainty, says losing streaks are inevitable, and recommends breathing and mindfulness to stay centered. Whether to stop trading after losses depends on the person.
Well we've all had instances as traders where we're losing three or four times in a row. Taking that fifth trade as confidently as we took the first is tough to do but it's necessary if you believe in your system. How do you do that though? How do you get to that point? I guess today is Randy Howell to talk about that. So Randy, if I had a couple losing trades in a row, I'm really nervous about taking that next trade. Yet the market hasn't changed. I know that I should believe in my system. How do I have that confidence?
Well, you develop it.
The difference between uncertainty and probability is what has to be changed in a trader's mind is that if you're looking for certainty in the market then you don't have the kind of mind that you need to be bringing into trading. If you developed a probability based mind, you're recognizing you're always working in probability and are you going to fall out of probability mindset? Yeah, you're human and when you see it happening you're pulling yourself back into probability thinking.
So probability would say that I could have six or seven, maybe even 10 losing trades in a row. That would be really hard on somebody's psyche. I know it would be for me. So after four in a row, maybe on a day, should I stop, should I set a limit and say if I'm losing four in a row I'm just going to stop the day and wait for tomorrow?
Well it depends on the trader. And the way I would work with a trader is that most guys I know that lose four in a row, they're stopping out, they're gone. They know that they're in a pattern and that.
They can't reorganize the self back to a highly disciplined mind to go back in and they're saying I'm just going to have, I'm going to have to take a break.
Others can, it's just like water off the back.
And is there a method that they got to that point or is it just their personality? Are they able to do that?
Sometimes there are people who are born right off the shelf with a great mind for trading. They're rare but I have certainly run into them. Most people have to develop it and it's something where it's practice and work that I would encourage would be again the breathing self, soothing and then mindfulness where in mindfulness you're looking for a particular kind of mind that you can build that allows you to interact with probability and randomness because ambiguity is the name of the game. And you have to develop the mind to be able to engage ambiguity, uncertainty, because it's going to want to flip to fear at the moment of uncertainty, at the moment of ambiguity and confusion. That's what the brain is built to do. You have to train yourself for it not to go that way. And it can be done. I see it every day, so I know it can be done.
Randy, thanks for your time.
You're so welcome.
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