Fighting back – aggressively fighting back from adversity must be in our shared DNA as traders because so many traders pride themselves in their ability to fight back from a loss. Some traders say they only trade really well when they are fighting back from a loss. They say they wish they would be so focused and effective without having to first be down for the day.

My take on all this fighting back is that it is wasted energy.

On a bad day when the market is not rewarding you, lose a small measured amount and quit for the day. Return the next day and concentrate on getting ahead so that you can press your advantage.

Exploiting your advantage, pressing, is where the money is. Fighting back from a loss is where the frustration is.

Successfully fighting back in the afternoon, after a low volatility morning that did not reward you, has two chances, as they say: slim and none. If you could not make money in the morning, when trading is typically more productive, what is the chance that you will emerge victorious from what is likely to be the lower probability afternoon?

I have a solution that is easy to take and simple to implement. If you are down after the morning session and volatility is at or near today’s low levels (VIX <20), then go out in the beautiful spring weather and take a walk, go to a Cubs game or skip rocks across a pond. Your time will be better spent recharging your batteries than heroically fighting with a market that is unlikely to reward you.

Once again, success in trading is achieved fighting forward and building profits, not endlessly working to reduce losses. When the market is rewarding you, you need to press. When the market is taking away your trading capital, you need to walk away.

Wishing you success in your trading, Jeff

Copyright © 2008 by Jeff Quinto

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