Before getting into the topic at hand, I want to first say that as a discretionary trader in the ES, I try my best to not think or act like the ‘typical trader’. The typical ES trader is not profitable.

A frequent mistake of the typical trader is to focus on making money. If a trader is not profitable, the primary focus must be to first stop the bleeding.  If one is mostly a breakeven trader, the issues may be a bit different.

I know we all come to trading with ideas of making money, and of course, that is the goal, but along the trading journey too many traders get caught up in the wrong type of thinking.  I receive numerous emails from traders who tell me about their struggles, and one of the most common themes is the trader who has a good run and then gives it all back, or more, very quickly.  While I don’t know the details of each trader’s circumstances, I can infer that a common characteristic may be difficulty accepting a loss, while it is still a small loss, especially after a good run. It’s very easy to become stubborn, or overly rigid in expectations when our confidence swells up along with our account. The market has a way of teaching a lesson to those who think they have progressed to the next level, or reached a new permanent plateau after a windfall or good run.  As the account swells, so does the ego; or the dream of easy money takes hold. And for those who are able to manage ego and keep it in check, complacency may be the danger.

Along my own trading journey, as well as watching others, it became abundantly clear to me that one must “learn” how to lose before they can win over time.  Lots of traders don’t want to hear that, its not part of the ‘dream’. I once shared this idea with a trading chat room that I’m active in, and several people either objected to it, or said they didn’t understand it at all. And I could tell that some people were actually upset that I even brought it up.  The most vocal critics of my comment were generally the struggling traders (not all struggling traders objected, some understand it and are still trying to find their way). Too me, this is further proof that trading requires a mind-set or way of thinking that most are unwilling to consider.