Knowing When to Say When

Knowing when to say when as traders will save you from digging a deeper hole. Have you ever been in a session where nothing seems to be working as planned? You begin to second guess yourself and what you’re seeing or worse yet, begin to question your abilities as a trader. We’ve all been there; it’s part of the process of growing as a trader.

The key is how you react once this occurs.

As you know, trading is as much a mental game as anything else. When you allow yourself to lose track of this reality, you run the risk of losing mental control of trading decisions.

This is trading tilt.

The term "tilt" is borrowed from poker, where it describes a player who becomes emotionally upset and starts making poor decisions that are not based on sound strategy. In trading, tilt is considered a dangerous state of mind that can lead to further losses and a significant decline in overall performance.

Trading on tilt can take many forms, including taking excessive risks, revenge trading (i.e., trying to recoup losses by making impulsive trades), or abandoning a well-planned strategy in favor of impulsive decisions.

There are behavioral characteristics of someone on tilt. Back-to-back to back losing trades is the core of the problem. Once positions go against you, the only thing you should do is exit. You don’t move your stop; you don’t try to justify what the market is printing; you just exit the position and learn from the loss. You don’t dwell on it and you definitely cannot allow yourself to slide into a ‘revenge’ mode, where you emotionally look for opportunities to make back what you lost. This ‘revenge’ trading a.k.a. trading tilt, 9 times out of 10 will just get you deeper in the red.

Why?

Because your trading decisions are generated from an emotional state rather than a clear and educated mind frame. Processes become grayed out and executions end up sloppy. At this point your view of the markets are coming from a place of desperation that inevitably will end badly.

The good news is you have complete control of avoiding this trading behavior that effects so many new and struggling traders.

Understanding this reality and recognizing the signs of trading tilt will allow you to avoid the pitfalls.

Keep things simple. If and when you find yourself in a losing streak (and only you can define what that streak is) simply remove yourself from the market. Exit your positions and walk away from the screens.

A change in environment for a period of time, a couple hours or a couple days, will do wonders for your mental state. The break from the markets will clear your head and allow you to re-balance yourself.

As we always mention, trading is a mental game; it’s you against you. It’s imperative to keep your mind at optimal levels in order to perform at its peak. It’s your job as a trader to recognize when you’re ‘off’; as no one will do it for you.

Have the mental strength to realize when you’re not at your best; take a step back and remove yourself from the markets.

This simple yet very effective process will help you avoid the all-too-common trading tilt that so many experience. Trade with crystal clear clarity not desperation.

About The Street Trading

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We look forward to joining you on your trading journey!