Tips for Analyzing Losing Trades // Ep. 6

In This Episode

• Why bad luck matters in trading
• Specific things to look for in your trading journal
• How to cut out what you don't want to do in life

How to Take Responsibility For Your Trading

When you're trying to changing your behaviors, sometimes people tell you to just “snap out of it.” But it might not be that easy.

In this episode, we talk about how to analyze your trading so you can see exactly what you're doing wrong.

This is the fastest way to see what you're doing wrong…and fix it. If you don't know what you're doing wrong, you won't know how to fix it.

It sounds simple, but sometimes it isn't.

Read the Transcript:

Hugh: All right. So I know I've done this before and I don't know if you have but sometimes you tell somebody, “Just snap out of it.” As we both know it's not that easy. What are some other steps that you can do to help somebody? To get them out of a situation or a mental block or whatever instead of just saying snap out of it?

Walter: I think that's a good point. One of our friends that I've worked with, her name is Nicola and she's a great trader. She was saying she went to the trading Psychology course that I created.

She was saying that her turning point was that. She's like, “I remember you know in one of your videos you were saying you just need to take responsibility”. Do you know what I mean? Which is basically what you're saying and that's really it.

There's a couple of different ways to do that. If you are journaling and you have a list of your trades you can literally pinpoint what went wrong on each trade. We are not talking about losing trades here.

So if your answer is anything but it was bad luck. It was bad luck. It was bad luck. It was just a loser. If there's anything other than that then that means that there's something else that's impacting your trading, right? It's not the random sequence of winners and losers.
Another way you can do that is so you can look in your journal and find it. You go, “Okay well, I keep doing this. I keep missing the trades. I'm always an hour late. So I'm getting in late. My stop loss is too far. I'm risking too much and that's affecting my reward to risk ratio” for example or something like that.

Or, every time I have a signal at this time, I miss it because I'm on my way home from work. Or, every time I have a signal after four losing trades I don't take it because I'm worried it's going to be another loss for example.

Those sorts of things can creep up. That's one way to see it. It is in your journal. If you are journaling but another thing is to ask why? It is called the three why’s? I don't know if you've heard this.

So what you do is you go, “The reason why I am trading is?” or “The reason why I am having trading challenges is this blank” whatever it is. So you write it down. Why does that happen? For example, the reason why is because I am getting in my trades late.

Why are you getting in your trades late? I am getting into my trades late because I am on my way home from work and that's when the four-hour candle prints. I can't do it because you know I am on the train. I don't have phone reception. Do you know what I mean? I can't do it you know and so by the time I get home, it's too late.

Hugh: Hey there! I hope you find this episode useful. I just want to let you know that Walter and I give away something valuable every month that helps traders improve their skills. You can enter to win by simply leaving an iTunes review and leaving a comment on our YouTube videos.

At the end of each month, we'll look at the comments and reviews from the month and we'll pick a winner at random. Each comment and each review counts for one entry during the month that it's pitted.

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Walter: Why is that happening? The reason why I am on the train when I'm going home is because that's how I always go home. Could you do something else? Could you wait until the four-hour candle prints and then maybe take a look on your phone?

Could you open up your laptop and check your charts in the BART station or you know outside of it? In a cafe or something before you get on and just get on later. There's always a solution.

It's just difficult when we put these barriers up and we say this is why but it's usually not why. There's always something behind that. You can dig deeper and figure out the real reason why is because well I want to get home early and I only want to get on the six, twenty train.

I don't want to get on the six, forty-five train. That is the real reason why. There’s lots of different ways to do this. I think to kind of dig into what is going on because it's so easy to say, “Oh, it's just I keep missing these trades” or “Oh, my broker keeps flipping me” or “Oh, you know the markets are too volatile now.”

Why are they volatile now? You can use the three why’s and you can do four or five, six however long it takes you to dig to the real reason. Also in your journaling, you should be able to throw your trades into a bucket. All your losing trades should go into one of two buckets either bad luck or I screwed up. I mean that's it. There's only two buckets really.

Hugh: I agree for sure. I think once you start asking those why's, it really comes down to much deeper reasons. Like I don't have self-confidence or I don't know what else there could be. I don't think this is actually going to work or whatever.

Walter: Yeah, that's it. That's totally it.

Hugh: It's kind of surprising once you start asking those questions, what comes up. You might not expect it. Especially like with your dream analysis thing that you use. I was surprised you came up on that one too. You might want to talk about that a little bit.

Walter: It is in the course. You Get What You Trade For Course but basically what you are doing is you are trying to figure out what the themes are. You will notice recurring themes in your dreams.

You will notice a couple of really important memories that you remember from when you were a kid. What you are looking for are patterns. If you want to ask the three why’s questions in a really good state of mind, try to do it right as you wake up or right as you're going to sleep.

It's almost better as you're waking up or after you meditate. So you want to be in that really calm state of mind where things you let them bubble up. You are not repressing them. You are not pulling them down.

The first thing you think about right when you wake up is just you know, why is this happening? It is probably going to be easier to get into like a hypnotic or a meditative state and do it but that's really powerful too.

To be in that state and then trying to dig into it and figure out what's going on. That's really a good technique for people who are wanting to want to get into that. Or, look at your dream themes or look at the biggest things you remember like your biggest childhood memories.

Why do you remember those and what does that say about you? What does that say? Can that relate to any patterns you know in your life? Those sorts of things.

Hugh: And how do you feel about that with those events?

Walter: Exactly. How does it make you feel, that's right.

Hugh: I personally found also just kind of building the habit of whatever you are doing during the day. Ask yourself how do I feel about this and I found that can help you find some patterns also.

Walter: It also helps you cut out what you don't want to do in your life. I don't want to be answering these emails or whatever do you know what I mean?

Hugh: Somebody else has to do it. That’s true. Cool. Thanks, Walter.

Walter: Thanks.

Hugh: All the information in this podcast is for educational and informational purposes only and is not trading or investment advice.

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