The stock market is a wild place - it can be difficult to not get excited over a position that's working well; similarly, it can be difficult to not get frustrated when it seems like the market is working against you. Technical analysis is important, but the trader's mindset triumphs all else - a bad mindset can (and will) affect all other aspects of trading negatively.

There are a few common situations that traders experience:

Euphoria: Every position is working, money is being made, and a trader feels like they are at the top of the world. Excitement and ego builds, making the trader experience extreme greed - going full size (or bigger) on new positions with the mindset that they are invincible. Can you guess how this situation ends?

Fragility: Losses are beginning to stack up, the trader feels frustrated and sad that several positions are trending in an unfavorable direction. Any trade that is moving even slightly in a favorable direction is taken off quickly to get out of the position with a small scalp profit. For positions that aren't working immediately, they are taken off - with no regard for set stop rules. 

These two situations (generally summarized as being greedy and fearful) happen often in trading - both can lead to devastating losses on an account. Having the discipline to follow and respect the technicals, rules, and trading plan irrespective of the current market condition or trader performance is critical for success in the long term.

Sometimes the musical chorus can be too hard to ignore - there is a conscious understanding that a trader acknowledges that they simply can't control their emotions. Even the most experienced traders experience events that present enormous strain on their psyche. 

Below are a few examples for obvious signs to step away from the trading desk:

Breaking Rules: Not following stop rules, profit target selling, entering too many positions, and other rules you have set for you and your account.

Outside Pressure: A bad day at work, a phone call with bad news, or some other major outside news that is at the forefront of your mind.

Excessive Greed: Feeling like doubling your account in a day by going double your full size on a position.

It's important to keep in mind while you trade that, at the end of the day, regardless of the performance of your account there is always another opportunity to make money. Hit your profit target for the day? Log off. Exiting positions without stops being hit? Log off. Think of trading as a marathon, not a race! 

It happens to the best of us. Sometimes the market can seem like it is working against a trader's particular trading style for an extended period of time. It can feel daunting and even a bit scary to have a few loss days in a row. But it is so important to stick to the fundamentals, the technicals, the rules, and shut out those emotions. 

The best advice in this situation is really quite simple. Stop looking at your profit and loss. Trading is a journey. Similar to a stock with its ups and downs, a trader's account will have its peaks and lows. The upside trend on the account overall is what matters! Never succumb to the idea of trying to "make back" the losses from the previous day(s) - this can and will lead to revenge trading, which may lead to even more losses on the account.

In trying times of a bad streak, evaluate your prior performance and keep in mind that at the end of the day, as long as proper risk/reward is implemented, the mathematics are in your favor - even with temporary loss streaks. The numbers don't lie!

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