Dr. Hendlin: I have been a swing trader for the last five years and have done it for a living for the past three. Over the last six to nine months, I have taken a severe hit to my capital base and am struggling presently. While the extent of my losses certainly stinks, I do not consider it to be the end of the world. What is worse is that I feel like crap personally. Because of the time I invest in it, I am certain there is a tremendous link between my performance and my sense of confidence and self-worth. Now I find myself at a low -- as low as I've ever felt for a sustained period -- and hope it is a bottom.
Because you are an expert on the subject and have seen similar circumstances lots of times, I turn to you for your wisdom. Thanks. -- R.K.
Yes, your effectiveness as a trader is certainly compromised if you are feeling miserable and your confidence is down. This unforgiving market has a way of pushing short-term traders up against the wall, testing their mental strength and flexibility daily. In the last two years, it has punished many who no longer call trading their profession.
Anything less than strong confidence and conviction is going to make losses easy to personalize and tougher to handle. As you intimated, when you're feeling so low, your view of the market and decision-making will be unduly influenced by your negative mental state.
For starters, consider taking a break from trading so that you don't exacerbate your condition by possible further losses. Because you say you're feeling as low as you've ever felt, you might be experiencing clinical depression. Consider consulting a psychologist who can asses the level of your depression and help you through this tough period.
Finding one who knows something about the trading world would be desirable but not necessary, as you are not looking for a trading coach so much as someone who can help you cope with possible depression. At a later stage, seeking a mentor or trading coach to help focus on trading issues may also be useful.
If you have been depressed for at least six months, you may be counseled to try an antidepressant for a short time, just to help get you out of the funk. I won't get into the pros and cons of using medication here, but many who need them find antidepressants safe and effective. Some, though, are more sensitive to possible side effects, so I hesitate to generalize.
If you won't take some time away from trading, at the very least you should drastically cut down on the number and size of your trades, and limit your trading sessions so you are not sitting at the computer for the whole day's session. Above all, resist the temptation to take foolish risks in the attempt to make up your losses.
Going through a long losing streak insults the pride and sense of competence of a full-time trader. It is even tougher to pull out of the gloom when nothing you try seems to improve your bottom line. Remember that your losses do not necessarily reflect on your ability as a trader. Try to be easier on yourself. Keep in mind that poor timing and bad luck can result in losses even when technical aspects of trades have been correctly assessed.
You Are Not How Much You Make
One issue worth mentioning is your over-identification with trading as providing your primary sense of self-worth. You need to begin delinking your self-worth to your trading results. A skilled psychotherapist can help you with this. It is also a good idea to establish some source of income that is not related to trading to lessen the pressure you feel.
The trap in this culture, especially for men, is clear. We are programmed to believe that our self-worth is directly related to our income and to our net worth.
But as the Martin Sheen character tried to remind his son Bud (played by his real-life son, Charlie Sheen) in the movie
, "a man's worth is not measured by the size of his wallet." It's easy to forget this when you make a living through an activity where the focus never shifts away from making or losing money and where this is all that anyone ever talks or thinks about.
To counter this constant emphasis on money equaling self-worth, invest yourself in family, friends, hobbies, and projects that you enjoy and that make you feel good about yourself. Work with the belief that
who you are transcends your success or failure as a trader.
Let this realization become so deeply embedded that it's never more than just a thought away.
Shrink Rap Trivia Contest #2:
I promised you a tough one and here it is. A collector's copy of
The Discriminating Mind: A Guide to Deepening Insight and Clarifying Outlook
will be sent to the tenth person who emails me at
email@example.com and correctly identifies who wrote the following and where it appears:
My soul preached to me and said, "Do not be delighted because of praise, and do not be distressed because of blame."
Now I realize that trees blossom in Spring and bear fruit in Summer without seeking praise; and they drop their leaves in Autumn and become naked in Winter without fearing blame.
Remember, both the correct name and source are required to win the contest. The deadline is Saturday, April 5, at noon. Email me with your best shot.
Steven J. Hendlin, Ph.D. is a clinical psychologist in Irvine, Calif. He has been in private practice for the last 25 years, investing for the last 20 years, and actively trading online as a swing trader and long-term investor since 1996. He is the author of
The Disciplined Online Investor, which was recently translated into Spanish. He is pleased to receive your comments and questions for publication in his public forum columns at
firstname.lastname@example.org, but please remember that he is unable to provide personal counseling or psychotherapy through the mail.
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