Self-realization is a good place to start in breaking a trading slump. I know it seems obvious that when you’re in a slump and trading poorly your results and account balance will reflect it. Streaks work both ways of course, and when we are winning it is just as notable as when we are losing. Understanding what is happening to you is awareness that may help you change some habits, which may also change your fortunes.
When in a slump I will often take a break from trading, a ‘timeout’. Stepping away is a way to force myself to stop and reset my mind. Although I may miss opportunities during that break, it doesn’t matter. The slump has crept into my mind and that is what needs to be removed. One winner may help but stepping away for a bit and returning is a much more needed approach.
While taking a pause, I will often look back at recent trades – wins and losses to see if there is a pattern. I will use my trading journal, the most valuable tool in my toolkit to search for clues. Am I trading wrong? Were conditions bad? Should I have been quicker on the trigger? Was I trading too much? This self-analysis is worthy feedback, but more importantly I will address the issues and write down corrective steps.
Practice is always the best way to build confidence. In trading, we like to paper trade, rack up a few wins and build confidence. Of course, we don’t make money but if something we are doing is structurally wrong, then at least we didn’t lose money and we can look to overhaul our approach.
Get your mind cleared by learning something new. Read a book or article that you never knew about, if you’re a technician look at 100’s of charts to determine scenarios, patterns, trends and direction. While paper trading, explore new avenues with different structures, maybe a strangle, butterfly or selling a bull put spread is something you might try on paper, then if successful transfer that to your trading account.
Lastly, reach out if you can to someone who has been there. I promise you there is nothing embarrassing about it, in fact you might just find someone who is also in a slump and you may help each other! I often just lend an ear to those in a short term struggle, and that may be enough to lift their boat. Honestly, we have ALL been there, as traders we are in the same position to win and/or lose all the time. There is no shame in losing, but keeping it inside could be a bad choice.
Trading/investing is not life or death, though sometimes we give it that much weight. Push through, be confident and recognize it. It will end, and then hopefully the winning streak will balance things out – and you’re on your way to great heights.