Many people that traded and invested in the stock market (or any market, in this case) experienced great volatility for the past few weeks.

Some made a kill, nailing their yearly return goal in a week. For many, though, it was an overwhelming time filled with emotions and anxiousness.

You are (were) probably in the red. You are (were) probably underperforming. You are (were) probably beating up at yourself for this outcome.

The reality is, this is a path that every investor and trader MUST experience in his/her journey. The difference is how one handles this hurdle that makes up to an amateur and a consistent investor/trader.


How to Climb Back Up from a Slump?

To be clear, it is NOT EASY to recover from a slump. Mathematically, it is hard (eg. a 50% drawdown will take a 100% gain to breakeven). Emotionally, it is even tougher to get back on track.

In times like these, it is crucial for one to go back to the BASICS.

Stop looking around Facebook groups and investing/trading forums for tips for the NEXT big opportunity.

Quit those groups if needed – these are noises that hardly contribute to your recovery anyway.

The point is, stop making investing/trading so complicated and difficult.


Back to the Basics

What are the trades that work the best for you? Make a list and focus on only taking these trades for time being – with smaller size.

If you are a long-term investor that has just dumped your holdings due to panic and fear, look into your investing process – have you followed your entry & exit strategy? Do you have one? Work on them one by one.

The point is NOT to remake your losses immediately. Rather, it is for you to rebuild the mental confidence towards yourself FIRST.


The Cheetah

 

 

“The cheetah, while the fastest animal on the African plain and can outrun any of the prey it feasts upon, always chooses to go for the young, weak or sick.

Once identified, it attacks with laser-guided focus and effectiveness. It is only then that the kill is most likely. That is the epitome of a professional trader.”

This is one the of most resonating trading analogy that I’ve come across lately in an article by Mike Bellafiore of SMB Capital (one of my favorite role models in trading).

As extraordinary as a cheetah is, it still focuses on the most basic kills which are also the most effective ones.

Likewise, the goal for us as an investor/trader is not to try to be smart and predict whether the market is bottoming. Rather, it is to understand our strength and take the best opportunity with probability in our favor.

Know your strength. Go back to the basics. Be a cheetah.


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