This character does not exist in the real world. He is imaginary and living in the head of a trader or bettor who is suffering the most exasperating run. It is the kind of trading streak when quite naturally there may have been a string of losers where, when they were cut for a loss, the analysis showed that there had been no run for the money and the feeling was that one may just as well have taken a wheelbarrow full of money from home and left it out in the street.
The mischievous gremlin gains no pleasure or satisfaction from those kind of losses …for he has had no involvement in them, which for the most part had either been badly thought out or misread signals, either suckered in by market noise or perhaps plain ole frivolity. They hurt the trader, of course, but what the gremlin has in store has far worse consequences than merely a shrunken trading balance.
It is mental disintegration generated from a period of hope that turns to despair, or seeing the goal wide open with the goalie lying yards away face down in mud only to then miss from point blank range. Or the near perfect planning of how a trading scenario may pan out only to have a potentially fantastic day scuppered by being a prick for a tick trying to unwind and bank profit. Or some ludicrous, unexpected and bizarre new factor coming into the market place from way deep in left field. “That’ll be right” the trader will say to himself. At this point, the gremlin can sit back smugly and admire his work.
The salient point is, how does one disempower this unwanted and negative associate ? To cease trading may work in the short term, but he knows that cannot last and has all the time in the world as the trader will resume at some point or else find another job. That said, taking a break to recharge, refresh, rethink, is no bad idea. Rationalising to one’s self that the market is cruel, there are losing trades and it’s also impossible to win with winning trades will not help, as it reaffirms and fuels the negative mindset that the gremlin has induced. Being dormant in the market may help short term, but the horse will need to be remounted at some point.
Thinking rationally again, it is a sure fire certainty that the run must end at some point. Adjusting or amending some tactics, techniques, selectivity and risk control are positives that may hasten the end of a bad run and disempower the gremlin.
1 Cut out the frivolous trades. Trade on your terms, not on a whim or an illusion.
2 Reduce trading size temporarily.
3 When in doubt, cut half ! Repetition, I know, but always a sound weapon to ward off demons and gremlins.
4 Do not look for perfection while trying to take profit. Book some profit/stagger profit taking levels (ie not looking to take profit at one price). Try to be quick to react if profit potential is diminishing. Perhaps even giving up a greater edge than normal to book some profit. It is so important to get some points on the board at this time.
I bolded the above, because snatching a defeat from the jaws of victory is the most debilitating aspect and what weakens you and strengthens the gremlin. BOOKING A PROFIT IN THESE TRYING TIMES STRENGTHENS YOU AND WEAKENS HIM !
He won’t go away forever …the best we can hope for is that he sleeps for a prolonged time. We have the power to make that happen.
© Hank Sumatra …email@example.com 2011. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Hank Sumatra and firstname.lastname@example.org with appropriate and specific direction to the original content.