Here Are Four Slump-Busting Strategies

For the third week in a row, and in typical “GroundHog Day” fashion, the
low-risk trade theme continues to be one of passing on any
pullback after the first, regardless of timeframe traded, and simply
either trading the micro one- and three- minute trends to their
exhaustion or catching up on your reading (more on that below) or those
yard chores you’ve been postponing for a while. And while I know many
are probably tired of hearing this — and maybe trading this if you’re
anything other than a range trader — and I’m certainly running out of
ways to describe it: If the sky is blue, the sky is blue.

Let’s face it — when the best low-risk opportunity of the week is a
momentary “lights out” blip in last evening’s Globex session when the
index futures momentarily opened as if the world was ending (thank you
one- and three-minute turn!), that about says it all.

If you’re a range trader buying range bottoms and selling range tops, it
doesn’t get any better than this. If you’re a breakout or trend trader,
it doesn’t get any worse than this.  Perhaps about the best thing I can
say is to remind traders with either style and current frame of mind not
to get too euphoric or down, as this too shall pass. It always has and
always will.

Nasdaq 100

See https://www.donmillertrading.com
for Setups and Methodologies

Charts © 2003 Tradestation

Slump-Busting Ideas

Over the years, I’ve found many tricks to try to restore or maintain
one’s confidence during the challenging times, either when the market is dry or
your rhythm has taken a hiatus. And despite the continual droning of the popular
trading press where hindsight is always 20/20 and after-the-fact egos distort
the true concept of probability, slumps
are and will always be a part of this business. As we approach the
end of the summer, here are a few tips to consider when battling yourself or the
market:

1. Small Wins

   If in a losing streak or after “one of those days,” work for small wins.
   Focusing on scalping a few good trades or simply ending the next day positive by
   a dollar can do wonders for minimizing the probability of a downward spiral.
   (Keep in mind I’m not at all suggesting an ongoing process where one continually
   caps gains which won’t offset draws, rather merely addressing heading off
   dangerous spirals.)

    

2. Review Past Successes

   One of the file folders I keep handy is a record of a strong two-month
   stretch when I was in one of those zones where trades seemed to roll off the
   fingers day after day after day. Of course, all such times do come to an end,
   yet by maintaining such a folder — including both trade logs and annotated
   charts — you can easily “remind” yourself that the necessary skills are
   there — even if temporarily dormant — as you await return of the market (or
   your) rhythm.

    

3. Varying the Vehicle

   In a futures funk? Trade the ETF for a while. In addition to
   automatically reducing the leverage and providing less-competitive fills, the
   change of pace can allow you to maintain focus on the same market. For those
   that trade similar patterns on multiple markets, consider diverting your focus
   to another market to help clean the slate and mind.

    

4. Reduce Size

   OK, this one may — and probably does — seem ridiculously obvious, yet
   managing size can be an important tool, especially for those working on
   increasing their size at appropriate times in the career path when confidence
   and results provide one the opportunity to step it up. Many traders,
   including this one, will find they’ll go through a one-step-forward,
   one-step-back period in stepping up size. Returning to the initial size from
   time to time can often right one’s rhythm.

   A while ago, a colleague introduced me to a book entitled “Golf is Not a
   Game of Perfect,” by Dr. Bob Rotella. (Dr. Rotella is a performance
   consultant for many of the leading PGA players.)  In one segment, he
   discusses how golfers work to “fool” their brain into restoring confidence even
   while in the midst of abysmal performance. It’s a book I highly recommend for
   any trader, and it’s a good reminder that the parallels between successful
   professional golfing and trading — both of which involve expecting and managing
   periods of poor performance — are strong and that most of the true battles lie
   within each of us.

   Good Trading and Have a
   Great Weekend!

   
   Don Miller