The document discusses how taking action can help overcome despair when facing losses in day trading. It advocates sticking to a consistent strategy and game plan rather than making rash changes in response to short-term failures. The author also emphasizes developing trading skills over the long run through incremental improvements, rather than focusing on short-term monetary gains or losses.

1. Action is the Antidote for Despair
Anthony Trongone, PhD, CFP, CTA
When experiencing a losing day, most daytraders have no tolerance
for failure. As soon as the day turns ugly; they swiftly abandon their
game plan. This is unfortunate because even a poor strategy that
has a basis in analysis is going to outperform a series of reflexive
trades. Over the long term, this form of reckless trading promotes
inferior results or at best mediocrity.

2. $6.00
$4.00
$2.00 performance of the spiders
on the day following a correction
$0.00
-$2.00
-$4.00
-$6.00
-$8.00
-$10.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
This is a performance chart showing the results of the spiders on the day
following an excessive 2% correction. Although there were 16 advancing
days (sitting above the black breakeven line), a summary loss of $1.46 in
these 30 days (disregarding commissions) does not afford us a
worthwhile trading opportunity.

3. MEASURING SUCCESS
Many active market participants try to make the best of unsupportive statistical
results; however, when the percentages do not support taking a position, it is
best to put your attention on future prospects? Given that the market is a
dynamic entity, is best to wait patiently because a better opportunity will
eventually surface.
Most daytraders put their focus on making a success of the current trading
environment, but when the conditions are unfavorable your yardstick for success
should not be on the existing market. If there is no discernible advantage, taking
positions undermines your long-term objectives.
Adding a few more dollars to your account is not as valuable as the development
of learning skills. Anytime the focus of your trading is on the wrong target, you
are doing yourself a disservice. Remember to put your sights on the long-term; a
winning streak is far less rewarding than a winning season.

4. TAKING AIM
Your aim should be on making small incremental improvements within a
collective assortment of analytical skills. As you sharpen these trading skills the
monetary rewards will shadow your success. And, because the economic
landscape is always shifting, never allow short-term extrinsic rewards to supplant
you desire to increase your proficiency as a trader.

5. CHASING FAILURE
Encountering a series of losses often deflates your confidence. When
trying to weather the storm, it is easy to begin experimenting. If you
are not careful, a few bad trades can bring about the adoption of new
rules; this is when trading can turn into an ugly business.
I am not referring to minor adjustments; but dramatic changes in
policy, such as always applying protective stops to your orders to
never applying them. Making well considered adjustments then
integrating them into your trading style is the way you evolve into a
better trader, but taking drastic steps is imprudent and usually leads
to more negativity when you realize it is not working the way you had
hoped.

6. In my book, Trading in the Footsteps of Sherlock Holmes, I describe how the
great detective had high praise for Professor Moriarty. He was a formidable
adversary because he would “sit motionless, like a spider in the center of the
web, but that web has a thousand radiations and he knows well every quiver of
each of them.” The spider carefully crafts her web and the vibrations from the
web transmit information to her. Waiting motionless, she is uncannily able to
detect false positive signals. When, however, the moment for action arrives she
pounces aggressively and without hesitation.

7. SFO articles by Trongone:
Action is the Antidote for Despair (June, 2012).
The Midnight Hour (July 2009).
Start off the day Right (June 2009).
Trump Bear Markets with a Momentum Play (April 2009).
Avoid Single Day Meltdowns: Identify Risk Differently, (November 2008).
Play Both Sides of the Market to Profit, (October 2008).
Monitoring Trading System Performance Day & Night. (August 2008)

8. Trongone, Anthony. (2010). Trading in the Footsteps of Sherlock Holmes:
Balancing Probability for Successful Investing. (Traders Press).