The best traders and best order flow traders can catch themselves in the act of making a wrong trading decision. They can know when they are about to make a wrong trading decision and stop themselves before they make it. They are highly self aware.
They know of the various scenarios that can play out if they go ahead with the decision. They can perform scenario analysis on their own decisions. They can see the repercussions of various trading decisions they make into the distant future. They didn’t just magically get this ability. They have made every mistake early on in their careers.
They have suffered huge trading losses at various points. Maybe even blown a trading account or two. They know that if they make poor trading decisions, they will suffer pain, whether on the next trade, or somewhere down the line the market is going to give them a big loss.
They know when they get the urge to double up on a losing trade, but then remember that losers average losers. For they have felt the pain of taking a larger than average loss and can remember and recall the event in their minds. They can play out what happened in their minds and remember the emotions and the negative outcomes. For they have lived through the experiences and can recall them at will in their mind and live through them again.
Great traders know when they are about to throw on a trade that does not conform to their system. They know when they are about to over trade. Part of themselves may want to over trade, part of them may have that urge, but it is countered by the fact that there is another part of them that knows it is not right to do so.
The great traders know that there are times when trading can become boring. They can just print money every month, but sometimes the satisfaction from that gets diminished over time. They need to make sure they do not over trade, or get involved in markets that they know nothing about during this time period.
Great traders know not to revenge trade. They know of the worst emotions is to attempt to try to recover from a big trading loss by attempting to get the money back right away. That is a recipe for quick trading account depletion. Which is why if you read about many great traders in the futures markets, they can go from trading thousands of contracts to trading just a few contracts. They vary their position size depending on whether they have taking big losses or not. Some of them take the day off or take the week off.
Richard Dennis said:
I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgement, so you have to put some time between that loss and the next trade.
Great traders feel absolutely comfortable taking small losses. They believe it is part of playing the game. While the amateur trader can get scared about taking small losses and thus never gets to place many trades. And if the trader doesn’t get to place many trades, then they struggle to get into the game and get the experience necessary to make the order flow breakthroughs.
Linda Raschke said:
It never bothers me to lose because I know I will always make it back.
Most traders do not need to perform any complicated daily rituals to be able to catch themselves in the act of making bad trading decisions. For they have lived through all of them and keep those experiences, trading quotes, trading wisdom, scenarios juggling around in their head. They just do it, instinctively, for they have gone through the transformation to being a successful trader.
For they know that the brain can hold far more trading information than people expect.