Both Winner traders and Loser traders suffer periods of drawdown and losses, which are unavoidable in trading; but what separates the Winners from the Losers is their differing perspectives and approaches towards trading’s “drawdowns and losses”.
To the Winners, trading is a “business”, a medium to longer term profit generating “investment”. The temporary drawdowns and losses are taken as the “interim costs incurred to setup a business operation or to acquire a trend”, which will be handsomely offset by the subsequent huge profit potentials. They focus on the process, doing it right with discipline. They maintain their peace of mind with appropriate leverage and stick to their risk management rules. They don’t count the eggs before they are hatched. They have patience and faith to keep moving forward. They don’t only see the “tree”, they see the thick patch of bushy “forest” behind.
To the Losers, trading is a “speculation”, a short-term income generating “game”. They couldn’t withstand drawdowns and losses; they crave for instant gratifications and are eager to make immediate trading profits. They focus on the outcome of every trade. They couldn’t stand to wait for their trades to ride on with much larger profits. They tend to over-leverage, ignoring and breaching all the risk management rules. They count the eggs even before they are hatched. They feed on their greed, keep hoping to make more and more the round after, from 30%, 40%, 50% to even 100% return but not willing to take even 20% to 40% temporary drawdown during the occasionally bumpy trading journey.
In fact, many top trend trading hedge fund managers, who had achieved remarkable success in making hundreds of millions of profits for their clients, had gone through drawdown as much as 40% to 60%, who eventually are generously compensated once the trends return in place.
Dear New Traders, congratulations! Your real journey has just begun. Take this great opportunity to learn how to master your emotions, face your challenges with faith, and grow your muscles. You have to learn how to master your emotions, before you can master your trading! Cheers!
