Wednesday, January 28, 2015

Let Go of the Past

When I let go of what I am,  
I become what I might be.
Lao Tzu

What are your worst losing trades? Do they haunt you? It is important to learn from your mistakes and to the extent that you can do that objectively and unemotionally. I am well aware it is not easy, but it is often necessary to now forget about the past and think of tomorrow. Once you have learned from your losing trades it is no longer necessary or desirable to think about them. Get rid of the baggage and remove historical emotions from your trading. It is important for your long-term success to neutralize the influence of these memories. Your past doesn't need to influence your future. It only has an impact if you let it. 

When everything seems to be going wrong, it is hard not to panic, especially if you are a new trader. Your emotions may start to take over. You may start to fear that you can't make profitable trades that you just want to walk away. Your past emotional baggage can intensify these feelings to the point that you start making stupid mistakes and dig yourself even deeper into a hole. 

There is a lot you can do to put aside these past memories and start your trading anew. The first thing you need to do is acknowledge your past losing trades. Don't pretend that they didn't happen or that they have no meaning, when you actually place a great deal of significance on them. You don't have to over-analyze, merely acknowledge that you had some past losing trades and that they bother you. You need to acknowledge that you may place losing trades in the future, but you aren't going to let that fact hinder you. In addition you need to realize that your past does not dictate the future. Believing that the past and future are linked is a common irrational belief that you must refute. Remind yourself that you can take steps to overcome a potential losing trade. For example, you can limit your risk so
that you will know deep down that it is virtually impossible to have a losing trade in the future that can have any real great significance. You can also make a list of past winning trades that you can pull out and review while in the midst of a current loser to remind yourself that you can overcome your current circumstances by calming down, thinking positively, and taking decisive action. You can tell yourself encouraging thoughts, such as "It's no big deal. I can endure. I can get through this if I just calm down." 

Knowing that you have an action plan for dealing with an emotional setback can do wonders. If you know that you have a specific plan ready to put into action, you'll feel a sense of freedom. You'll know that you are ready for anything. Let it go and focus on tomorrow.

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