Good Trading During Unlucky Times

Usually, things go well right from the start, however this is not always the case.

One thing I’ve repeatedly seen with traders over the past decade is that they start winning right away, and the process is always the same. And then the winning begins.

But a while ago, I had a meeting with a friend of mine who was really struggling. She had specific goals, solid fundamentals, and a pretty good mindset. In practice, she was looking really good.

Yet, she was losing in the first round almost every trading competition and in key trades, and the frustration was starting to build. She had improved. She was doing all the right things. She’d done everything she was supposed to do. Why wasn’t it paying off?

Simple: bad luck.

In tennis, every tournament draw is made at random. The seeded players are placed in a predetermined spot in the draw, but everything else is luck of the draw. If you’re not one of the highest ranked players in the tournament, there is a chance you could be randomly chosen to play the #1 seed every time. It’s not likely, but it’s nothing different than stepping up to play Blackjack in Vegas for the very first time and losing the first six hands in a row (the first and last time I gambled in Vegas).

The same thing can happen to a trader. You can have a good system (good fundamentals), a good mindset (disciplined and unemotional), and still lose.

Ultimately, you are a good trader. But your account balance says you’re a failure, and the only reason you’re a failure is simply bad luck. If you had started trading at almost any other time, you would have had a lot of money in your account. But because you started at an unlucky time, though, you’re a loser.

So, is there anything you can do? Here are a few solutions.

One, you can persevere. It’s, by far, the hardest solution. Taking action removes anxiety and lessens doubt. Sitting around and trusting does nothing to take away those emotions.

But what does Warren Buffett do? He perseveres. He buys companies for $32 billion at a time when the stock of that company is probably going to fall in the upcoming months (along with the stock market in general). Buffett can spend billions in a potentially bad luck period and feel good about it because he’s going to be in that business for a “100 years.” When you trust your system over the long-term, perseverance can make you very wealthy.

Another thing you can do is diversify. What if, instead of putting all your eggs in one basket, you added other Robots to your portfolio? Lastly, you could choose to re-optimize every month. There’s still a chance you could start at a bad luck time, but you have a fighting chance that your system is prepared to trade in current market conditions.

Bad luck is out there and it can sabotage you. If you’re ready for it, though, you will come out very happy in the end.