Don’t focus on failure instead focus on what you are doing to succeed

Trader's Mindset

Mar 14

Everybody wants to trade. Okay, that might not be true but a lot of people who watch the market want to trade. Some of us have even had a lot of success in the past when we worked really hard. But as time went on, some of us quit working really hard. And, we took some losses.

Now, I subscribe to a lot of trading newsletters and also read trading forums. I read too many articles on why traders fail. Let’s change the discussion to focus on what you should be doing to succeed instead. The honest truth is that failure like death can come in a thousand ways. There are lessons. But, those lessons are more relevant for traders who are already experiencing success. My point is any trader may experience some difficulty but the traders who go on to have continued success are more likely to focus on what can make them successful. Let’s change the discussion to focus on what you need to be doing to succeed.

And, the answer is the hard work and not resting on your laurels. I had an amazing track record of predicting the market when I started. That’s great. But, I also worked really hard at my craft.

The following are some of the things you need to be doing today:

  • Generating new trading ideas.
    • You can generate ideas by trading in the simulator, using generative methods, reading trading magazines, running studies, etc. However, I think there is value in testing what you can come up with yourself because if you have a thesis about something then it is more likely to work then just testing something random. This is why I think simulated discretionary trading can even be useful for system traders.
  • Trading in the simulator or backtesting for system traders
    • I admit it is easier to browse the news, trading forums, or read a trading book or magazine. Let me ask you, how much time have you spent engaging in simulated trading vs. doing those other activities? Now, which activity is more likely to help you grow as a trader?
  • Reviewing your simulated trading
    • It is not enough to just trade more in the simulator or in the live. You must review your trading. For myself, my trades are highly intuitive and the result of complex processes that I use for reading the market in real-time. While the processes are clear in the moment, it is not always easy for me to verbalize or write down why I took a specific trade. But, this is important work because when I can do that then I can identify more clearly my setups which allows me to backtest, look for the same trade in future, etc.
    • The market is unstructured. I know a lot of traders are searching for the structure that will support them best. But, the only way to know is to test it. Here’s a thought though, good enough is better then an unrealistic perfect.
  • Learning from and discounting your losses.
    • Losing is really difficult for many of us. Both focusing too much on losses and ignoring the causes for losses is the wrong approach. The right approach is to learn whatever information can be gained while discounting the information that isn’t important while remaining emotionally detached. If that sounds difficult the following process might work: review, learn, implement new processes, and then forget the loss (detached emotionally).
  • Expanding out by looking for new markets or new ways to apply existing edges
    • For the first time in a long time, the ES is offering great day trading opportunity again. One of my problems in the past has been that I considered myself more of a single market trader. However, I am now mentally prepared to expand out into other markets like CL, NG, EMD, Bitcoin, etc. I know I can find additional opportunity.
  • Be open to new ways of trading, be willing to make adjustments, be willing to fail the method without failing yourself
    • Similar to the above, some of us might have had success trading markets a certain way in the past but those methods might not be working today. Often for a discretionary trader, there can be a sort of emotional attachment to trading a way that worked in the past. But, learning to trade in new ways and have success with those methods can produce just as much satisfaction too. For the discretionary trader, some may have had success with market orders in past but a willingness to use limit orders can help. Likewise, if a trader is trying to use limit orders but always missing the trade then learning to use market orders might improve results.

About the Author

The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at