Long Posts

How To Deal With A Loss In Discipline

setbacks are just part of the process.

Have you ever experienced a loss in discipline after a period of consistently following your plan; of consistently doing the hard (but right) thing over what merely feels good and easy?

I know how it feels. I’ve been through that and it’s certainly discouraging to fall out of your good habits.

It always starts this way – you say to yourself, “Okay, one time and that’s it.” But it’s like an addiction; it’s a never ending cycle of following your rules for a certain period of time and then doing one thing that messes up everything.

So the question is, what do you do when this happens? How do you deal with a setback?

To be honest, I don’t pretend to know a sure “no fail” way because there’s no easy answer to this question. I’ve “failed” to follow my rules countless times but then I picked up the pieces and started again.

Now with experience (and maturity), I think of setbacks as just part of the process. They’re not separate from it. They never were.

[Trading] is a journey of self-mastery.

Let me explain…

You’re constantly learning about yourself as you lose discipline. If you’re a good trader, that’s what you do. You learn about your mind, about your fears, feelings of guilt, frustration, disappointment, and you learn to cope with these feelings. You also learn to be more rigid with your rules. 

After all, that’s what trading is all about. It’s a journey of self-mastery.

People tend to imagine market success as a straight line, but the reality is that it rarely is (if ever). Success is a process which encompasses setbacks. But these setbacks can either destroy you or strengthen you. Either way, you decide.

Yes, the choice is yours!

So to reiterate, there are no easy answers, but I’m going to share some tips that you will hopefully find useful.

We often try to avoid emotions, but just for a minute give yourself space to feel them.

Accept what you are feeling.

Yes, it is f****** annoying to fall out of a period of following your rules; of being discipline. When you experience such a setback, you feel you are back to square one. And with that thought comes a plethora of other unpleasant thoughts and feelings.

As the cycle of negativity gains momentum, you tend to make more bad decisions. Mistakes engender mistakes.

We often unconsciously try to avoid emotions, but just for a minute give yourself space to feel them. Allow yourself to inquire about their nature.

When you really pay attention, you will eventually start noticing some patterns in your thoughts and feelings — one of them being that they’re both, by their very nature, fleeting and ever-changing.

So, while you might feel like a failure, discouraged, frustrated, disappointed, sad, alone, tired, angry, [you name it], keep this understanding in your mind: It’s impermanent. And, a good exercise would be to try not to label your thoughts and feelings as good or bad. Instead, just be with them and try to see if you can witness their passing ( No pushing, no forcing, just witnessing).

 When I do make mistakes I make sure that I am not following through with them.

Acknowledge that mistakes happen.

You are not a robot. Humans are fallible. We all make mistakes. I mean, I still do. Not often, but it happens.

And anyone who’s been trading for a while who says that they never ever make any trading mistakes anymore is not being honest with himself/ herself.

But here’s the thing: When I do make mistakes I make sure that I am not following through with them.

I think that’s key. Acknowledging your faults puts you in the best place to learn. Plus, there is also something very liberating when you take responsibility for your actions.

It’s not opportunities that are lacking in the markets, what’s lacking is the ability to take advantage of those opportunities with a balanced and equanimous mind.

Pause to reflect.

All too often, what contributes to our misery is that is we don’t even want to acknowledge our setbacks. At all cost, we try to avoid thinking about them. But not thinking about them doesn’t diminish their intensity. Or their repercussions. It doesn’t make them go away. In my own experience, ignoring a problem only makes it worse.

So, maybe stop trading for a day or a week. Or more. Just to reflect and give yourself enough space to feel and let go.

In the Trading Psychology Mastery Course, we really work on building discipline, patience, resilience, and equanimity. And one of the precepts in the course is to stop trading for 2 weeks. Many people have sent me feedback about this ‘no-trading for two weeks’ rule, stating that they’re missing opportunities in the markets.

My answer is always this: If you think you are missing out, then you haven’t understood what trading is all about.

You see, it’s not opportunities that are lacking in the markets (there are always opportunities arising and passing at all times), what’s lacking is the ability to take advantage of those opportunities with a balanced and equanimous mind.

When you’re trading, or even looking at the markets, all kinds of thoughts and emotions arise — wanting to get out, fear of missing out, greed, etc., and I’ve set up this precept in the course because I want people to take a break from that. Only then can they gain perspective.

Here’s an analogy: When you stand too close to a tree; when you literally have your face glued to the tree, you can’t even see that there’s a tree there. You only see a blurry mass of colors. As you step back a little bit, you start to see shapes, and the colors become more defined. And when you step back way further, you begin to see that there’s a tree there. As you keep stepping back, you see a whole bunch of other trees…

Similarly, you can’t analyze your behavior objectively when you don’t step back for a moment. Because you’re constantly being clouded by thoughts and emotions you’re not seeing things for what they are.

So I assure you, you’re not missing out on anything in the markets. Take a break. Reassess. Let go. Come back fresh and determined.

Too many rules kill the rules!

Keep your list of rules small.

This is something that took me too long to understand: If you have too many rules, your ability to abide by them will undoubtedly go down. That’s just how it is. Too many rules kill the rules!

On the other hand, few but meaningful rules help give structure to your trading operations. They’re easy to follow and you’re more likely to adhere to them.

That is why traders need to test their system first before committing their hard earned money. You must know your rules; what’s more, you have to know that they work or else you will never follow them consistently. This is called proof of concept.

Knowing that they work will give you the confidence to stick to them during rainy days; during sunny days.

 

 Decide that you’re going to work on developing the awareness and the mental strength to snap out of your discursive train of thought that wants you to forget your intention.

Focus on your intention.

Why did you start the good habit of following your rules in the first place? I’m assuming it was to give yourself the gift of consistent results. This intention is important to remember as it will help you get back on track.

You got derailed because for some reason you forgot your intention, even for a moment. Some thoughts came into your mind and they seemed appealing in that moment, so you acted upon them.

Okay, it happens. Now reiterate your intention and decide that you’re going to work on developing the awareness and the mental strength to snap out of your discursive train of thought that wants you to forget your intention.

The best part is this: As you develop this capacity and as you practice it, it becomes easier and easier.

Change happens here and now.

Focus on the present.

All the setbacks, failures, all the troubles … they happened, but now they only exist in your mind. Instead of obsessing and dwelling on them, try to bring your mind back to the present. If you want to break some unwholesome patterns of yours, it’s happening now, in the present. Not in the past. Not in the future. Change happens here and now.

Conclusion

Too often, we, traders, feel bad about our lack of progress, we feel guilty that we haven’t been as disciplined as we wish we could have been, and we regret the actions we took. Remember this: In the end, trading is all practice. It’s about falling down and getting back up, and learning, and improving… it’s a process.

Don’t think of these above steps as a “quick-fix” solution. Take time to reflect on them and whenever you have a setback, come back to these steps. Take the long view, both behind you and ahead of you, and keep persisting.

One of the commonalities of pro-traders (the legendary ones you read in the books) is persistence. They persisted in the midst of vicissitudes and they made sure they stayed long enough in the game to experience success.

 

What’s your take?

Do you think there is more to it? What are your tips for surviving a loss of discipline? I would love to hear from you.

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Yvan
I've been trading for a living since 2006. By merging mindfulness (an in-depth study of the mind and its tendencies in the present moment), a good trading process, and an efficient business practice, I went from being a losing trader to a consistently profitable one. Through my work here at Trading Composure, I aim at helping you do the same.
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  • You have described it so well and yes, we all do fall in this trap. It is how our brain is hard wired to cope with evolution. It is just like the markets: Things don’t go up in a straight line!!! Guilt is the killer though. When you feel guilty you are effectively experiencing double trouble, setting you back even further. My advice, work on the guilt: Know that you are doing you best at any stage of the game. If you knew better you would behave differently.

    • tradingcomposure

      Mercedes, thank you for your comment. “Know that you are doing your best at any stage of the game. If you knew better you would behave differently.” I couldn’t have articulated it better! Work on the guilt!

  • Yvan, Kudos on a well written piece. Only a real trader can relate to the emotional roller coasters that we traders go through in a daily basis. Losing money never feels good. Ever. And it sucks each time you cut a loss. One of the best investment I made is a good punching bag, to get that bitter yucky feelinh out of my system. Happy trading with peace of mind and keep up the good work.

    • tradingcomposure

      Thank you so much for that comment Jeffrey. Yes, it’s a hard won battle for sure. A punching bag is a great way to relieve yourself from accumulated stress, feelings, and other negative states of the mind… Maybe I should give it a try 😉 I’m glad you like the content. Cheers

  • Syed

    View the glass half full rather than half empty, best line.

    • tradingcomposure

      Thank you Syed! I appreciate it 🙂