 Welcome back to the Trade Hacker Mindset. In this episode, we're gonna talk about how to overcome a series of losses. Trading the markets can be difficult to master and seemingly just out of reach. Professional traders have a secret. Trading requires total mental and emotional control. It requires the Trade Hacker Mindset. All right, so let's jump into this topic. How to overcome a series of losses. To start with, understand this. Series of losing trades is a normal part of being a trader. Every single trader goes through it. Every single successful trader goes through strings of losses, okay? It happens to me every month. Sometimes every week, you know, at some level. But the reality is that does not mean that you can't be successful, okay? So think about this for a minute. Think about a specific time when you had a series of losses, okay? Now really try to think back about how you felt as you experienced those losses. So typically it goes something like this. You have one loss and you're like, ah, darn it. One loss, you know, I lost on the trade, okay? But next, right? So not a big deal. Second loss in a row. Oh man, that's two losses in a row. You start to feel a little bit uncomfortable, right? I mean, think about maybe the feeling in your chest. Maybe you start to get a little bit tighter in your chest, right? Third loss in a row. Now you're starting to, sometimes maybe your confidence in the strategy starts to falter. Maybe you start thinking, do I need to do something else to my strategy? Is this a good strategy? You know, all these thoughts subconsciously or consciously start flowing through your mind. A fourth loss in a row. I'm done, right? Like how many times have I seen new traders where if they lose three or four trades in a row, they completely abandon the strategy. They completely abandon what they're doing or they completely change the variation of the strategy or they completely jump away and go on to the next shiny object. It happens all the time. But the reality is, I have strings of three, four, five, six losers in a row all the time on different strategies. But the difference is, is that I have confidence in the strategy, okay? And I have confidence in the strategy because of a couple of reasons. Number one, I have created a trading plan, okay? So I have some very specific rules and criteria for how I trade. Number two, I trade with proper position size, okay? So if you have one or two or three or four losers in a row, but your position size is too big, then guess what's gonna happen? That's going to mentally shift your mind into thinking that it was the strategy when in reality, it might just be your position size, okay? Scaling down position size is the remedy for a ton of trading issues, okay? So consider that, is that the issue, okay? Number two, going back to the trading plan, if you're taking a specific trade and let's just use a specific strategy like a calendar spread strategy, okay? If you are copying that trade from somebody and let's just hypothetically say it's a navigation trading trade alert, right? So now if you're copying that trade and all of a sudden you get into a period where you have a string of losing trades, let's say two or three or four trades in a row that become losers, what is your confidence going to be like on your fifth trade? It's not gonna be very high, right? Either you've already stopped trading it or it's completely shattered your confidence or, or, or, right? So part of the reason that you don't have the confidence is because you haven't done the homework, you haven't done the backtesting, you haven't done the, you know, small size or paper trading for that strategy to have the ability to have the confidence to withstand those strings of losers, okay? Hopefully that makes sense because that's a huge, huge deal. Do not gloss over this as if it's just some little thing. No, this is a big deal, okay? You have to, have to, have to put in the work on the front end so that in the back end when you do have those strings of losers which you will have in every single strategy, you have to have that confidence so that a string of losers isn't going to shake your confidence and it's not going to throw you off track from continuing to trade a strategy that has a definite edge, okay? So that's number one. Number two, and this kind of plays into position size as well, but it's, you know, are you too focused on individual trade performance, okay? Because if you trade based on statistics and probabilities like we do, then you know that the probabilities play out over a large number of trade occurrences, okay? So if you have an 80% win rate on a specific strategy, that does not mean every eight out of every 10 trades will be winners, right? But the more trades you do, now if you do 100 trades, there's a very high likelihood that 80 of those 100 trades will be winners. If you do 1,000 trades, there's a very high likelihood that around 800 of those 1,000 will be winners. But 10 trades, I mean, you might easily have five winners, five losers, but that doesn't mean that the strategy isn't working. That doesn't mean that you need to do anything to fix it. That just means that you have to let the probabilities play out. So focus on many trade occurrences, okay? Focus on the big picture, focus on the law of large numbers, not on individual trades. And that goes for losers and winners, okay? Think about that. Just because you have a couple winning trades in a row, go back to that example of 10 trades, just because you have 10, you're 10 out of 10 on the last trades, that doesn't mean you're a genius. And that doesn't mean that the strategy is now have, the strategy now has a 100% win rate, okay? That means for that little, tiny, minuscule data of 10 trades that you had a good string going, okay? But don't let that fool you into increasing your position size or doing things that you shouldn't do, stick to the trading plan, okay? So it works both ways for both winners and losers. Going back to the trading plan, okay? Cause this is a big one. If you don't have a written trading plan, then you have zero chance of being a good trader, okay? Let's just be very clear and concise. And what's interesting is this topic came up in our community and it came up because there are, we have some awesome, awesome traders in our community and there was a couple of traders that were sharing their trading plan. And you know, maybe it's, maybe you gravitate to just writing things out. I like to write things with pen and paper because it actually helps integrate into my mind better. And then sometimes I transfer that to a spreadsheet or a document or whatever. I would encourage you to do whatever works best for you. Maybe it's a spreadsheet. Maybe it's just a written plan on a piece of paper, whatever it is, do something, okay? And at a very, at a minimum, what needs to be included in that trading plan is your entry and exit rules. For certain strategies, this isn't critical, but for certain strategies, you might need, you might want to input, you know, kind of what the risk versus reward is. For example, if you're using a profit target and a stop loss, you know, all those details need to go into it. Some of this is going to vary by strategy. You need to write in your trading plan, what the buying power required is for what you're doing. In other words, really dial in what your position size needs to be, not only based on your account size, but also based on your overall risk tolerance. And that's going to take some trading to actually figure out. You know, most people think, most people start out and they think they're trading in proper position size. And a lot of times what you'll realize is that you might be trading two or three times the size that you actually should be. So what you want to figure out, and this only can come from experience a lot of times, is start with the minimum position size, feel the losses, actually go through the losses, feel the losses, and then, and only then start to scale up, okay? And once you get to, you'll know your pain point, right? Once you get to a point where you don't like the feeling of taking a loss of a certain size, then that's your threshold. That's your pain threshold for position size. So, you know, some people have bigger accounts, some people have higher pain thresholds, and so you need to figure that out for yourself. I can't do that. We give you parameters for each of our strategies of what we feel like the maximum position size that you should ever take based on your account size, but it really comes down to you figuring that out for yourself because everybody is a little bit different, okay? Position size, and then the fourth part of your trade plan needs to be your pre-market and post-market routine, okay? Some examples that I do personally. One, for our community and all of the trades that we do for our community, I post a current positions and outlooks every single day, pre-market. So that comes down to here are our current positions. Here's our, you know, if there's any action that we need to take, for example, are we going to consider closing this trade today? Are we near a profit target? Or do we need to take it off from a losing standpoint? Do we need to adjust the trade? So I document any action items that might be happening with that trade today. And if there's no action, it's just a hold, right? And then on the notes, if there's any specific notes about things to be looking for, for that trade, okay? So those are just kind of some simple things that I post about each trade. And then position and outlooks kind of give a snapshot of what's going on in the markets, in the pre-market, as well as potential trades for the day. So it was implied volatility contracting. Is implied volatility expanding? What's going on? Is there any big economic news coming out? Is the FOMC meeting today? Is the CPI meeting reported? Is there anything else? And so just giving a snapshot of here's my current positions, here's what I'm looking at for the day, and that gets you in the right mindset of kind of preparing yourself for going into the trading day, okay? So that's part of my pre-market. The other thing that I do is I like to meditate, okay? Some of you may or may not like that. I know there's several people in our community that also do the same thing. I like to meditate, and when I do it, I'm not thinking about anything, except my breath, okay? And this does a, you wouldn't believe, if you don't meditate, you wouldn't believe the clarity and the, I guess I just want to say the peace of mind. I mean, that's what it's about, right? It just creates a peace of mind going into the trading day so that it just helps me make better decisions. It may do something different for you, but it just helps me make more rational decisions as opposed to just coming into the market, just guns ablazing and just kind of shooting from the hip at what comes my way. That just doesn't work for me, okay? So that's part of my pre-market routine. And then you need to have a post-market routine as well. Part of my post-market routine that I've really built on over the last few months is I upload all of my trades for the day into my trade tracking software, which I use Trader Sync. And when I do that, then I have to tag each trade as the strategy that I'm using and I take notes on the trades, okay? I take notes about if I was feeling something. I take notes about if I made a mistake on the trade. I make a note about some little quirk that's not normal about how I manage the trade or if I broke the rules, I flag myself, I do all that stuff. And one thing that I've found is it really, like there are times now, just this little thing, there are times now when I am considering breaking my rules or doing something with a trade that in the back of my mind, I know I shouldn't be doing. And previously I may have even just done it anyway. And then I kind of am mad at myself after the fact, or when the trade closes or the trade goes against me. But now just this little post-market routine where I flag myself in my tracking system and it shows up as a big red flag on my trading screen, if I do something, just that little thing has prevented me from making as many mistakes, okay? Because I'm like, ah, I'm gonna have to flag myself in my TraderSync software if I do this. Just little things like that, it's amazing, just some of the little psychological things that can be a big difference, okay? So that's the trading plan. Minimum entry, exit rules, potentially risk reward, position size, and pre and post-market routine is the minimum. Now here's the thing, we did a live stream based on one of our calendar strategies, not too long ago. And like I said, a couple of our members posted their trading plans, which is kind of what triggered this. And I told everybody on that stream, I said, I would love to see every single one of you post your trading plan. If you're not comfortable posting it publicly in our community, then you can also send it directly to me, personally. Just my email, direct message, whatever it is. I would love to see everyone's trading plan. And if anything, just get a second set of eyes on it, I can comment and let you know if there's anything I would suggest changing. Guess how many people sent me their trading plan? Or guess how many people posted their trading plan in the community? Zero, zero, goose egg, nada, none, okay, there's, if I had to guess, I would say 10% of the traders in our community have a written trade plan. Now what are the statistics about winning and losing traders? The one that I always hear is 90% of traders lose money. Well, if 90% of traders don't have a trading plan, do you think there's any correlation to that? Do you think there might be a little bit of tiny bit of correlation to that? I do, okay? All right, so just to recap. So when it comes to dealing with how to overcome a series of losses, number one, create a trade plan, okay? If you're not creating a trade plan, you are not a serious trader. Number two, trade your plan, okay? Number three, focus on your position size and scale down if needed. If you go through a string of losses, there's nothing wrong with scaling down your position size until you can kind of get a better handle mentally and emotionally on that strategy, okay? Figure out if there is actually an issue or if it's just letting the probabilities play out. And number four, lastly, focus on the law of large numbers. Don't focus on individual trade performance. Focus on many occurrences and how that allows the probabilities to play out. Hope this was helpful and we'll see you in the next episode.