I don’t know about you, but the endless potential and hopeful promise that comes with each trading day is part of the feeling that I love most. I mean, doesn’t it just feel great? There’s no telling what lies ahead each time you enter the realm of the markets, and often, the mere possibility of newfound lessons being learned, goals reached, and perhaps even achieving your best day trading performance to date breeds excitement and optimism each time.
Now, keep that mental picture close to mind, but do think for a moment about what happens when, instead of a banner day, the makings for a bad trading day show up instead. I know…way to kill the vibe, right?
The reality is this, though: You’re going to have a bad trading day every now and again, and sometimes, it may come out of nowhere. It can be a real shock to the system when that happens, too, leaving you feeling a bit staggered and hurriedly trying to figure out what to do next, whether it’s simply call it call it a day, or take certain actions in hopes that you can still “rescue” things and somehow turn a bad trading day good. But can that really even be done? That’s what we’ll discuss here today…and we’ll reach a verdict before we’re finished, too.
You know those days, right? Perhaps you’re feeling ill or didn’t sleep well, or you argued with your spouse that morning. Perhaps it’s time to pay the bills for the month and you’re bothered while feeling that money is a bit tight. Maybe the kids were unruly, or you’re still feeling the effects of a trade from the prior day. Whatever it is, it’s interfering with your objectiveness and disposition, maybe even before the trading day starts.
Whenever stress, anger, fear, or other emotions or pressures from your life outside the markets follow you into your price action trading endeavours, you have the makings for a bad trading day already. Outside influences and stressors like the ones above can cause you to lose focus, be undisciplined, and use poor judgment when it comes to such functions as trade selection, risk management, execution, and more.
And, nothing makes for a bad trading day faster than sustaining negative outcomes, things like losing or missed trades, committing strategic mistakes, and any emotional fallout that may be sticking with you after the fact. From this point, some traders are prone to taking undue risks or ill-advised trades in the heat of the moment in hopes of exacting “revenge” on the markets, which is a habit that can quickly turn a bad trading day into a disastrous one.
See also: 5 Steps for Bouncing Back from a Severe Drawdown
Because the market is really no place for emotion, traders must learn to identify these pre-cursors for a bad trading day before they can produce any negative impact. So, whenever something happens to unnerve or upset you, whether it’s in life or in the markets, identify that the stressor is there; it’s mere existence isn’t the problem, anyway. Problems arise, however, if you let your compromised physical, mental, or emotional state interfere with your normal trading process. And alas, you can follow these steps to ensure that doesn’t happen:
First off, never trade in any kind of altered or emotional state. If life or trading has gotten to you, go for a walk, take a drive, or simply step away and take time to reflect on it. Think about what’s upsetting you, and whether it’s something you can take proper action(s) to fix. Think about how your emotions at the time won’t help your trading, and practice the mindfulness techniques we discussed recently to try to re-focus your mind and body for trading. This is probably your best and only hope for “rescuing” a bad trading day once things have gone against you early on.
Resist any and all temptation to arbitrarily take the next set-up you see in hopes of making up for any damage that’s already been done that day. Instead, be even more vigilant about trading your strategy right down to the finest detail, qualifying set-ups with extreme care, and managing risk and execution with precision. And, if you decide that you just aren’t able to concentrate and devote the rightful attention to your trading process, then there’s only one thing left to do…
Remember, nobody is ever forcing you to trade, and on any bad trading day, quite often the best decision you can make is the decision to not trade at all. In the long run, the money you’ll save by avoiding unnecessary losses and ill-advised trades is the same as winning, so unless the conditions are right for trading—both in terms of the market, and in terms of your own physical and mental state at the time—never feel obligated to trade. That’s one component of trading over which you can always exercise complete control, so use it to your advantage!
See also: 3 Scenarios Even the Pros Don’t Trade…But Do You?
Here’s our answer, and some candid thoughts on whether you can—and perhaps more importantly, whether you should—try to “rescue” a bad trading day:
Can you rescue a bad trading day once it’s in progress? Probably. Stepping back and thinking mindfully about how you’re feeling can work wonders sometimes, and it’s possible that putting negative thoughts and emotions aside and pouring yourself back into the markets and your trading process could be just the thing to help you feel better, too. It’s usually not something you can do in just a few minutes, though…more like 3 or 4 hours, from my experience, anyway.
Now, that means you can still salvage what’s left of that trading day, and especially if trading end of day, you’ll still have time to sneak in a quality entry in the event that you’re able to cool yourself down and find one. But I think the more important question to ask is this: Should you try to rescue a bad trading day? Realizing, of course, that for some traders, the answer is going to be a resounding “No!”
If ever you’ve tried to turn around a bad trading day and only ended up making things worse, then perhaps that’s sign enough that it’s not a prudent choice for you. Or if you’re still learning to overcome losses or manage your emotions, then the same is going to be true.
When trading for the long term no single trade or trading day is important enough to fight yourself over. So if you have the tools and mental ability to re-focus and recover following stressors like the ones we discussed, then go ahead. If not, though, simply end each bad trading day early and be glad for the whole new beginning that’s coming your way the very next trading session!