$13,000 In Profits Last Week; 5 Steps I Took To Break A Trading Slump

$13,000 In Profits Last Week; 5 Steps I Took To Break A Trading Slump

I played baseball in college and had a tryout with the Atlanta Braves so trust me, I know a thing or two about hitting slumps.

While my Masters is in education, I did take several courses in the psychology of sport and to be quite honest, I find the lessons learned apply to trading as well.

Trading is a very humbling game, even for the world’s best traders. At any given time, there’s countless professional traders going through a slump.

So, what do you do? Ho do you get out of a slump?

Most people actually think slumps are created by a trader doing something wrong with their strategy. However, what usually causes an ongoing slump is how the trader is affected mentally.

Recently I was rattled by my biggest loss ever and I slipped into a slump. Confidence is everything if you plan to stay in the Wall Street game.

This past week I broke out of my slump and went on one of the best tears I’ve had since I started this newsletter hitting over $13,000 in profits.

Here were my mental solutions to get over my big loss and the slump that followed.

1. It only takes one good trade to break out of a slump so I reminded myself a trading streak is just ONE trade away.

2. I narrowed my watch list to names I know and have cashed in on before.

3. Then I spent a fair amount of time visualizing the steps I took to execute those trades successfully.

4. I applied my core strategy scaling into trades at support or after resistance breaks.

5. Stick to your guns! Despite a choppy market, I traded with confidence again giving the trades time to develop.

Bottom line: back to the basics, the same strategy that made me over $100,000 in the last 12 months before my big loss and the ensuing slump!

Anyone who’s been with me for a year will tell you, when I get on a winning streak I tend to get real hot so let me be clear, I’m seeing the ball well right now!

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Comments
  1. Thanks for the encouraging Post. I’m in a slum now. New trader in the room getting in to late and holding too long wishing for a turnaround lost about 4500 in first two days in the room. Decided to sit it out and paper trade as I dont even know how to set stops, (using mental stops) etc. Was just excited watching Mike make that $10,000 on FREE right before my eyes. I just don’t know enough to trade real time now. but maybe I should be in the swing room, (Is that a seperate price?) I heard some guys in swing saying they could see in the day room. I am going to slow right down. I heard a saying that the market isn’t going anywhere.
    Any way my question to you is, What was YOUR big mistake that caused your slump? I really enjoy the ‘day’ room, I see great potential to realize my dreams. ( thanks for the exhortation not to swear in the room) any way there are about 4 question in this comment.
    Regards
    Grant Smith

    • Hi Grant. Yes, the swing and day are two different services. I placed a hedge bet on an ETN and let it get out of control, that was what started my slump. Keep in touch. J.

  2. YES! it is all in your mind.

    When you were doing #3, the visualizations:

    - were you seeing yourself doing the actions that you did previously, (reminding yourself how you did it, building confidence)?

    - or were you seeing yourself taking action in the future, like a rehersal for the big show?

    • I was reflecting on previous trades that went well, reminding myself of what patterns I looked for at the time and how to time the story again.

  3. Do you like SEFE? What are your thoughts?

    • No I don’t, looks like the pump is ending now so lower highs coming.

  4. Jason, do you personally teach the basics of understanding trading?, if so where is it located and what are the costs?

  5. Yep. I think your slump is highly correlated with the down market. My portfolio suffers each time we turn down this hard. You showed us your portfolio lines w/ the overall market trend lines. Spot on. I know you will pick it back up soon.

  6. Well LYSCF kicked our (you know what) my biggest loss yet, I have noticed that you go off on some stock very rambunctiosly and I think I will stay with the 5-10 percent rule. I know we will all have losses but sometimes I get caught up in all the energy you have for those news flashes. Well another lesson learned!

  7. Jason,
    I too have been on a bit of a slump beginning with my entry 10 days ago KWK. I didn’t use the Fib tool or discipline for entry and soon found myself upside down pretty deep. I did however hold the trade and looks like KWK may start a run into earnings which is Aug. 7th. I got back about 1500 on the trade on Friday and am back almost even and may even end up with a profit out of the deal. Bottom line though is if I would have practiced what you teach for precision entry and stop losses, I would have never been in the position I found myself in! For what it’s worth, I am very confident your slump is behind you and I know we will continue to prosper! Hope your moving goes well and I look forward to the upcoming seminars as the education provided is excellent! Have a great weekend and will see you Monday in chat my friend. :)

    • We all break the rules from time to time Kevin but a quick review after moving to cash is usually all it takes. I’m looking forward to slowing down and only moving on the best possible setups. See you in chat soon, thanks for the note.

  8. How does your swing trade strategy work during the summer months? In a bear market?

    • Works fine, there’s always a sector or two that are hot in any market. In addition, I often flip my strategy and short the market. For example recently I played the VIX and shorted a few overbought small caps to take advantage of the overbought situation. Would like to point out swing trading with the bulls is the easiest, I get much more reserved in bear markets protecting gains from bull rallies.

  9. If you have an entire industry telling you how to trade, you’re going to go into a slump. They want you to follow the heard. Remember, trading and gambling can be equal, until you understand the difference. When you become The House, then you have the edge.

  10. I have also been in a slump and am down around $11,000 this year. However, I lost almost all of that money in two trades that I made knowing I should have got out or should have had a stop. One I held overnight hoping it would bounce only to wake up with the price cutting in half! The other I just messed up my ticket order (default set to 1000 shares, I thought it was 100 and added a 0. Had $86,000 in one trade alone that was heading south) so I have spent a lot of time making sure I don’t make stupid mistakes. We cannot control the market but we can control ourselves. Once we do that, our trading improves. I’ve researched and find myself with prepared orders that sometimes match Luke’s calls before he makes them. I think I’ve learned the secret to picking the winners the majority of the time. It’s the discipline I’m working on. I set an unrealistic goal for lifestyle trading with a daily amount that should’ve been a weekly amount. Now that I have things under control, I’m going to start picking away at that loss. Smaller positions at better entry points has been good for me so far. I made one trade yesterday for a $600 win and I stopped trading. That was good enough for me and if I can do that every day, I can live well. That was a ten minute win by the way. I appreciate Jason, Luke, Steve, and Phil, the whole team, for making this possible. Please keep up the great work and I will always be around. Thanks much!

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