11/2/2025 - Very often, there is an intermediate phase of development in which some of your trading is successful and some is not.  This is not at all necessarily because of changes in our trading psychology.  Rather, markets change in their direction, volatility, and correlation to other markets, ensuring that any given approach will work some of the time and not at other times.

If your trading has been profitable, but marked with losing periods, the best practice is to isolate those losing periods and see what might make them different than the winning periods.  It's possible that the losing periods were periods of greater distraction in your personal life; it's also possible that the losing periods were choppier or more volatile than the winning periods.  Reverse engineering periods of loss is the first step in figuring out how to adapt.  

The other helpful exercise is to reverse engineer the greatest winning periods and see what you might have been doing differently and what markets were doing at that time.  Often, this review will tell you when you're in your sweet spot, enabling you to grow your risk-taking.  For example, my recent trading reviews showed that when I began by identifying markets that were stretched on a short-term basis and then identifying how their movement lined up with their behavior on the longer time frame, I was often successful in figuring out how the shorter and longer perspectives lined up.  If I started with the big picture and (prematurely) developed a directional opinion, that was when I did my worst trading.

Learning from your successes fuels your positive psychology and provides the confidence to size up your trades.  As I emphasized in my book, the goal is to turn your best practices into sustainable processes.

Read our previous post about dealing with unsuccessful trading here.

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