Many traders start out very eager to learn with the goals of making money and doing well, but are not prepared for what it really takes to stay in the game. Staying in the game is the key to giving traders enough time to learn and improve and develop as a trader, but when a trader's Capital is wiped out because risk management was not taken seriously or incorporated consistently as part of their trading process, it is the reason why there is such a high turnover rate in traders.
Staying in the game is the key to giving traders enough time to learn and improve and develop as a trader...
EP 018 Transcript
Welcome to the Affirmations for Traders podcast, a special space created, especially for you to listen to affirmations that make a positive impact to support you in your trading journey. I'm Tessa your host, like many of you as a trader, I understand the struggles of this journey very intimately. I believe that by adding the power of affirmations to your toolbox, it can be the game changer that you're looking for to help you improve your trading potential and to develop yourself into a better trader.
You're listening to episode 18 of the Affirmations for Traders podcast.
Hi. How are you doing? No doubt, this has been an especially tough year so far for many reasons, but also for many traders and investors. There's a lot of pain and losses out there not only financially, but emotionally and psychologically. Even the most seasoned and best of traders were affected. If you were deeply impacted, I am truly sorry that you're going through this. If you need to talk to someone, please reach out and talk to someone. Don't hold it in by yourself. Get support even if it's just to talk. If it helps, you're welcome to reach the show to release and vent if it helps you, it would be confidential. Feel free to email the show at firstname.lastname@example.org or go onto the affirmationsfortraders.com website and contact the show that way.
So, initially, I was going to have this week's topic on Edge, but I think it's important first to talk about losses and "staying in the game". I plan to save Edge in Trading for next time.
Developing an edge is extremely important to have in our trading strategies, but even with the best trading setups and an out-of-this-world trading strategy, if we don't have a solid Risk Management plan that we incorporate CONSISTENTLY, then we can still lose it all. Protecting our Capital, even when it's small should be a priority. Some traders think that if they have small capital, they don't think it's worth protecting as much. But that is not the right mentality because it's about building the habit of incorporating risk management into your trading process. What happens when your capital grows, and you have not been in the habit of applying risk management? Most likely you would not apply risk management consistently to your larger capital because it hasn't been a practice. It's very tempting to skip this step because it's not exactly easy to do and it's not exciting, but it's prudent and necessary.
I want to speak really quickly about losses as a reminder. If you haven't listened to the last episode where I interview a fellow trader, Ian, in the last episode, episode 17, it's worth listening to. Ian shares his views on keeping losses small and managing risk. I want to add to that also that you always want to know what your downside risk is. If you can find a way to have a cap on that downside, so you know what the max loss can be, and work on a strategy where there is high probability on the upside, then you're heading in a better direction. This might be an example of a Low Risk: High Reward, or risk to reward scenario. But balance this with other metrics, such as appropriate position sizing, diversification, and to a degree win/loss ratios. It's really an art. It's a delicate balancing act. All this needs to work together, not in isolation. And, I acknowledge that it's easier said than done, right? It's very tempting to take short cuts. We tend to take short cuts because it seems easier at first than to put in the work to build the process.
If we don't incorporate risk management, it's like gambling.
Have you really reviewed your Trading process lately, what's in your Trading Plan? Does it have risk management built inside the plan? Did you stress test it under various scenarios, including worst case scenarios? We want to get in the habit of asking ourselves the questions to hold ourselves accountable. And find the holes in our process and plug those holes up.
What are the actions you can take this week, no matter how small to make sure that you have a strong risk management strategy in place in your trading process?
Let's turn to our affirmations to reinforce the things that most likely we already know deep down, but just need to be reminded more frequently and firmly through affirmations.
Before we start, let's prepare ourselves. Take a moment and close your eyes. Give yourself permission to be open to the affirmations you're about to hear. And feel free to repeat along with me.
1. Protecting my capital is crucial to my ability to stay in the game.
2. I acknowledge that real trading is a journey with ups and downs, a long game that I am ready for.
3. I work on the areas in my trading that needs improvement, and carefully amplify what's working, and eliminate what's not.
4. Risk management is the glue in my trading process that keeps me in the game.
5. I remind myself of my WHY for trading every day because it keeps recharged and motivated.
6. I take my Trading Plan seriously to help me stay the course.
7. I balance high probability setups with sensible risk management strategies
8. I know my potential max loss on each trade
9. No matter how good my strategy is, risk management is critical to keep me in the game.
10. Knowing my maximum loss potential helps me to structure a better trade setup.
11. Position sizing is a regular part of my risk management strategy.
12. My losses don't exceed my gains.
13. Handling losses well, allows me to stay in the game.
14. The longer I am able to stay in the game, the more chances there are for me to become a better trader.
During the week, reflect on these affirmations and repeat them with deep intention. Feel free to add any of your own to this week's affirmations.
Hello, this is Tessa. I want to take this opportunity to thank my listeners for being loyal and listening to the show. If you have been listening to the show for awhile and still enjoy it and want to keep it going and you think it will help others, please give it a 5 star rating. Sarah, I don't know how to reach you back but if you're listening, thank you so much for your review on Audible by Amazon. I happened to see it a few weeks ago and didn't realize that it has been out there for awhile so I really want to reach out and say thank you so much. I greatly appreciate it. Everyone have a great week and please incorporate risk management into your trading strategies. Thank you, and have a great week. Take care.