1.Taking ownership of losses– No one is responsible for our losses except us. Not the market, not the system, not the people who gave us the money to trade. We have to realize that we were wrong, we had taken too much risk, and we were employing trading methods that did not work. Period. No point in blaming outside “manipulators” of markets or bad luck; We, as traders, need to accept that we have completely and utterly made a hash of things (really no choice..this is not the luxury we can afford). In a job scenario, we can blame others and get away with it but not in trading.
2. Stop trading right away– a trader might not like to hear it but this is absolutely necessary. Take the time to process what had happened, figure out what was done wrong, and make radical changes in the approach to markets.Jumping from one system to another will not cut it. Optimizing the system based on last 6 month of mkt performance would not cut it. Just a small time-based break would soothe off the mind a bit..Most of the times, this should be enough to come back as a different trader.
3. Refocus and relearn – Use the time away from trading to work on other aspects of your life and career. Create alternate streams of income so that one doesn’t depend on trading income alone. ‘Depending on trading income’ in the initial stages of trading is probably the biggest sin in trading.
Trader should try to focus on building the self-image with other aspects of life not just with trading.In doing that, he can remain opportunity-focused and not regret-focused. Please stay focused on what you could control, not on what you couldn’t;
4. See the setback as an opportunity to bounce back – I am sure the loss was very painful .Make sure that you would never go through such an episode again. Try to create a new balance between trading and the rest of your life so that you would never be dependent upon trading results for your happiness and fulfillment.
5. Handling depression – a trader need to figure out how to handle depression..more so, a losing trader. It is better to handle it heads on than brushing the episode aside and continuing to lose money in a state of denial.
Depressed feelings are a normal response to loss: the loss of money, the loss of dreams. Sometimes you have to go through that loss before you can come out the other side as a different person, one who has learned from the experience. So, please stay positive.
6. Get out of need to make money mindset – If a trader gets attached to the need to trade and make money–and once his perfectionist voice of “I should have bought there” and “I should have sold here” in hindsight kicks in –he is no longer grounded in markets. It’s when those frustrations build over time, becoming self-reinforcing, that traders lose discipline and focus and eventually perish. Mental rehearsals would help in these cases. By staying physically relaxed in one’s breathing and posture and by mentally rehearsing a mindset in which it is OK to miss moves–there will always be future opportunity–traders can prevent many of these train wrecks.