Reboot Your Equity Curve
A 3-Step Trader's Lifeline
Equity Curve in the Red
“You’re red again. Your equity curve couldn’t get any worse, it’s a disgrace. You couldn’t trade this badly even if you tried. How can you ever turn this around?”
Conversations I and almost every other trader have had with themselves at one time or another.
If this is you right now, carry on reading…
Turning The Ship Around
Step 1
Stop. Yes, just stop trading for a bit. You are digging a bigger and bigger hole. Your confidence is getting battered, finances are hammered. If you carry on as you are, you are in a no-win situation.
Why?
You’ll either keep going until you blow up = BAD
Or you’ll get lucky and recover some profit, which only reinforces the habit of poor trading = BAD
So you need to stop and regroup.
Step 2
Stopping trading takes the burden of performance off your shoulders. Now you are free to look at things objectively. Start with your performance. Yes I know, it’s probably a grim sight. But try and look at it through the lens of a head trader auditing a junior trader’s performance. What metrics matter?
Pre-market prep. Market calibration. Execution. Sticking to the plan.
Identify ONE area that needs the most work. For most that’s discipline. Just sticking to the dam plan! For others it’s strategy – your strategy just isn’t cutting it. Whichever it is for you, commit. Decide on one area to work on and vow to work on it relentlessly until it’s fixed.
Step 3
Let’s imagine you chose discipline. You just can’t stick to the plan rules. Ok so now you come up with a very simple plan for the next week. I will do X. (X being stick to one important thing. Like a daily loss limit.)
Bottomline
Your job is to just get some momentum.
Because if you’ve been losing for a long time, you won’t have had any forward momentum at all.
We are just trying to get you moving forwards again.
If you chose strategy from your audit, start with something simple.
“I will trade the ORB on the DAX every day” (My webinar here on the opening range break if you’re interested).
Again we aren’t trying to turn the P&L around in one week, we want to get you some little wins.
Prove to yourself you can stick to something.
Finally, go into the weekend feeling good about your trading, excited for the future. Then next week you do it again, and again, and again… Get that momentum flywheel spinning fast, build on it. When you are ready, and confidence is high, start to shift your focus back onto performance.
This 3 step process can now be deployed at any time in the future.
Think of it like a trading reset button.
When things aren’t going your way you stop, focus on one goal, and get momentum once more.