For trend traders, consecutive losses are a correct occurrence. It is precisely because of these consecutive losses that most people develop psychological issues, which prevents them from consistently executing their trading plan, ultimately leading to failure.

Back in the day, after going through countless hardships, I finally designed a trading system with a positive expected return. I conducted extensive historical backtesting and felt confident that there were no issues, thinking that this time I would definitely succeed. Then I started live trading, only to encounter a three-month consolidation market right off the bat, which led to immediate losses.

This made me feel very down, but I didn't give up. I began to analyze the reasons and then made optimizations and modifications. Unexpectedly, a significant market move occurred in the fourth month, but because I had altered the original trading system, it resulted in me only making a small profit.

If I hadn't modified the original trading system, I would have made a substantial profit, recouping all the losses from the previous three months with a surplus.

So even if your trading system is well-constructed, without the ability to execute, you cannot achieve profits.

Advertisement

I often say that consistent execution is the final hurdle for a trader because human nature is difficult to overcome. Human nature seeks perfection, and frequent losses can lead to doubts about whether one's trading system has become ineffective, leading to interventions that disrupt consistent execution.

Whether you are a novice or an experienced trader, watching your money fluctuate in the market will inevitably cause some psychological issues.

The psychological issues faced in trading are not something you can forge or avoid; they can only be addressed by simplifying the problem.

It's just that novices have a lower level of trading awareness and may become nervous when facing ups and downs, potentially leading to emotional trading, which can interfere with their trading plans. On the other hand, experienced traders, although they may also have some psychological issues, understand how their trading system handles risk and return, and they can continue to execute without deforming their trading behavior.

In other words, the fundamental solution to psychological issues is to enhance your understanding of trading. Do not attempt to avoid them, as human nature is difficult to conquer, and you cannot avoid it.The mindset only causes trouble for those who do not have a trading system. Once you have improved your understanding of trading and developed your own trading system, you can solidify it. During the execution process, even if you face losses, the impact of mindset issues will be minimal.

Therefore, there is no need to avoid the issue of trading mindset; establish rules, adhere to their execution, and confront it directly.

Some people often ask: What should you do when facing the constant stop losses and torments of a volatile market?

There are three methods. The first is to change the entry method, such as increasing filtering, which reduces the number of trades and consequently the number of stop losses. Of course, you may also miss better entry points and more opportunities.

The second method is to consider the exit strategy, such as increasing the stop loss. This will also reduce the number of stop losses, but when a stop loss is triggered, the loss will be significant.

Both of these approaches are merely palliative measures.

The third method is to truly accept a stop loss method that suits oneself from a cognitive standpoint. This is a fundamental solution.

In essence, once the trading efficiency of your trading system has reached a limit, any modification to the system will solve one problem while simultaneously creating another new problem.

If you keep modifying it endlessly, there will never be an end, and it is impossible to achieve an optimal state.Share some things I knew before you in trading. There are many things, many principles, and after trading for a long time, you can understand them all. However, society is about who understands first; understanding early and late leads to different destinies.