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Making a Comeback
Have you ever had a bad day when nothing seemed to go right? First, you got up late. Second, your computer wouldn't boot up, and third, when it did, you couldn't seem to get in and out at the right time when executing even the most basic trade. What really upset you was when your Data line went down for 10 minutes during a critical moment in your trading plan. Traders face setback after setback, but they never feel beaten down. They recover from a setback quickly and are ready to tackle their next challenge with assurance. Not all traders can take setbacks in stride, however. For some people, any loss regardless of how small can be upsetting. How well do you take setbacks? Here's a brief quiz to show you where you stand?
A group of traders were asked to answer the following questions on a 4-point scale. To what extent do you agree with each of the following items? If you strongly disagree with an item, give yourself a score of 1 for the item. If you disagree, give yourself a score of 2. If you agree, give yourself a score of 3 for the item, and if you strongly agree, give yourself a score of 4. Answer each of the following items, and see what score you get:
1) I tend to get angry more than most people. 2) I believe that there are people with huge resources and influence who can control market prices and I think that is unfair. 3) At times, I feel angry even though I'm not sure why. 4) When I'm feeling down, I sometimes put on a trade to feel excited and thrilled. 5) Almost every day, something makes me at least a little angry. 6) I secretly wish I could punish people who do not live up to my expectations. 7) I can make myself angry about the past just by thinking about it. 8) When I'm frustrated or upset, I have difficulty sticking with my investment strategy. 9) I blame myself when trades do not go my way.
What score did you get? If you received a score between 9 and 16, you scored in the lower quartile, which means that less than 25% of the traders who took this quiz obtained a score as low as yours. In an analysis of our database, we found that individuals who scored in this range were optimistic, flexible, ambitious, and creative problem-solvers. In contrast, if your score was between 22 and 28, you scored in the upper quartile, which means that 75% of the traders who took this test obtained a lower score than yours. It was found that individuals who scored in this range tended to experience higher levels of stress, were easily frustrated, and often allowed this frustration to interfere with their trading.
If you scored high, don't despair. Resilient trading is often a matter of attitude. A resilient trader is realistic. He or she accepts reality and appreciates what the markets have to offer. On some days the markets offer many opportunities. On other days, however, there are just a few. But whatever opportunities are available, resilient traders accept the current state of affairs. They don't pressure themselves into trying to take out more money than the markets are willing to give.
Resilient traders are eternal optimists. They may expect setbacks, but they don't equate a setback with personal failure. They are confident that if they put in enough time and effort, they can overcome any obstacle. That said, they accept their limitations. They don't believe that they must be "perfect." Trading is challenging enough. You don't have to make it even harder. Manage your risk, anticipate losses, and don't beat yourself up unnecessarily for not meeting unrealistic expectations. Enjoy the process of trading, and don't merely focus on the prize. With the right attitude, you can be a resilient trader and achieve enduring success.