A good baseball player who finds himself in a hitting slump never gives up. He keeps on swinging. No matter how hard it is or how much pressure mounts, he must keep trying to make contact with that ball.
There are stories galore about athletes who hit major slumps but kept at it until they broke through. Steve Cauthen, famed jockey of 1978 triple crown winner Affirmed, found himself in a horrible losing streak shortly thereafter, never hitting the winner’s circle for 110 consecutive races. (He claims divine intervention broke the streak when he substituted for another jockey on Father Duffy).
In the early 1980’s, Northwestern’s Wildcat football team went on an unenviable streak of 34 consecutive losses, a record still in place today. Yet, they came out for that 35th game and turned it around. They didn’t fold up their tent and go home as many would have done (who could blame them if they did?).
As traders, slumps are common. They can be a function of poor luck or perhaps a system that needs adjusting. We are all too aware of when we have a drawdown in our accounts. It affects our mind, which has bearing on how we move forward. Who can stand a beat down day after day? One would think the odds would favor us just once during a bad streak, but alas, we remember that the odds on a tenth coin flip are always 50/50, even after seeing nine straight heads and no tails.
How do we shake the downturns to create some positive movement in our accounts? My good friend and colleague Doug Kass from RealMoneyPro talks about how the market has amnesia from day to day, and we must also have amnesia in our own performance. Forget about it and just move on. Easy, right? Hardly!
If you drown yourself in your sorrows of losses, you will eventually dry up your account. I often talk about exercising patience in trading, and when you’re in a slump, it is critical to do this! Give yourself a chance to win by starting fresh each day. Take a short break so you will come back with more energy than before. I do this often (by taking a walk or going to the gym), and it is a great help to both my mind and body.
When I’m back, I continue to trade. I am always ready to take another trade, because if I cannot, then it’s over for me. I’m not talking about over-trading here; instead, I am talking about NOT being scared of getting back into the game. Tom Sosnoff, founder of Thinkorswim and TastyTrade, tells us all the time to take the next trade, and that is great advice.
Wayne Gretzky once said, “You miss 100% of the shots you don’t take!” Indeed! Keep swingin’! You’ll make contact!
