Managing Drawdowns - Do This When You're Underperforming!
Hello Traders. It's been awhile since I last uploaded a workshop. Myself as a full-time trader, to be frank, the past 6 months have been tough for my personally. I've gone through some really bad drawdowns, mostly due to my external pressure that's causing me to have lower performance.
In today's topic, I am going to talk about "Drawdowns", which is not something people usually talk about. Social media, Youtube, all these platforms are made to make you 'feel bad'! People are constantly showing off their profits, but who'd willing to really open up to their drawdowns and bad trades?
Drawdowns are inevitable in trading, the only you can eliminate drawdown is to not take any trade/ risk. Make sense?
From my humble six years of trading experience, i realize most of the successful traders have one thing they are very good at - which is managing drawdowns and negative emotions. Think about it, we're all human, we're all a normal trader, why would some constantly achieving such a high performance while some constantly losing?
These are the four simple steps to help you in refining your drawdowns and hopefully get you out of it.
1. Understanding probabilities
- While we're in a drawdown (negativity), it's vital for us to take a step back and look at the numbers. Three things to read - trading plan, strategies data, market condition. If you're whatever you do is wrong, that's usually due your forcing trades during uncertain market environment/ condition, try to re-assess everything.
2. 3R Process (Review, Reflect, Revise)
- This is the most important process i've utilized for years to improve my trading consistency. Review your trading plan and all your journaling, then reflect what's the root of the problems, then find solutions around it. Remember to simplify things! By over-complicating your journaling, trading plan, or trading systems, really don't help things to be better.
3. Eliminate negativity
- Us, especially as a full-time trader, is common for us to blame ourself due to our bad decisions. But sometimes understand that no one wants to be in a drawdown, as it is all probability-based. Who want to lose money? But over the years, i found that the most successful traders out there have one very common personality - Confident.
- Be confident on yourself, that's the easiest element that allows you to execute trades consistently and fearlessly. Believe in your system, the drawdown is only temporary, you still got a long way to go. FInd a solution, fix it.
4. Take a step back - Re-evaluate
- When you're in a drawdown, most likely your rational behaviour and emotion have been negatively impact. So stop trying to force things, take the time you need to refresh your mind, re-set your mental state then come back stronger.
- By not giving yourself time to re-set your mental state, you're not just halting your performance, it could be self-sabotaging as well. Because by that means you're not applying the 3R process, certainly not fixing the problems too.
- Most of the losing streaks have one common losing pattern (that is hidden), so it is our accountability to find our the root of the problem, then frame a set of routine and action plan to solve it.
Hope this short workshop helps you a little bit.
Let me know in the comment section below what's your worst drawdown and how do you fix it!
Do not forget to like if you enjoy the content, and share with someone who'd enjoy reading this.
In today's topic, I am going to talk about "Drawdowns", which is not something people usually talk about. Social media, Youtube, all these platforms are made to make you 'feel bad'! People are constantly showing off their profits, but who'd willing to really open up to their drawdowns and bad trades?
Drawdowns are inevitable in trading, the only you can eliminate drawdown is to not take any trade/ risk. Make sense?
From my humble six years of trading experience, i realize most of the successful traders have one thing they are very good at - which is managing drawdowns and negative emotions. Think about it, we're all human, we're all a normal trader, why would some constantly achieving such a high performance while some constantly losing?
These are the four simple steps to help you in refining your drawdowns and hopefully get you out of it.
1. Understanding probabilities
- While we're in a drawdown (negativity), it's vital for us to take a step back and look at the numbers. Three things to read - trading plan, strategies data, market condition. If you're whatever you do is wrong, that's usually due your forcing trades during uncertain market environment/ condition, try to re-assess everything.
2. 3R Process (Review, Reflect, Revise)
- This is the most important process i've utilized for years to improve my trading consistency. Review your trading plan and all your journaling, then reflect what's the root of the problems, then find solutions around it. Remember to simplify things! By over-complicating your journaling, trading plan, or trading systems, really don't help things to be better.
3. Eliminate negativity
- Us, especially as a full-time trader, is common for us to blame ourself due to our bad decisions. But sometimes understand that no one wants to be in a drawdown, as it is all probability-based. Who want to lose money? But over the years, i found that the most successful traders out there have one very common personality - Confident.
- Be confident on yourself, that's the easiest element that allows you to execute trades consistently and fearlessly. Believe in your system, the drawdown is only temporary, you still got a long way to go. FInd a solution, fix it.
4. Take a step back - Re-evaluate
- When you're in a drawdown, most likely your rational behaviour and emotion have been negatively impact. So stop trying to force things, take the time you need to refresh your mind, re-set your mental state then come back stronger.
- By not giving yourself time to re-set your mental state, you're not just halting your performance, it could be self-sabotaging as well. Because by that means you're not applying the 3R process, certainly not fixing the problems too.
- Most of the losing streaks have one common losing pattern (that is hidden), so it is our accountability to find our the root of the problem, then frame a set of routine and action plan to solve it.
Hope this short workshop helps you a little bit.
Let me know in the comment section below what's your worst drawdown and how do you fix it!
Do not forget to like if you enjoy the content, and share with someone who'd enjoy reading this.
