Why Do You Keep Trading After Hitting Your Daily Loss Limit!?

by birtanpublished on August 23, 2020

In this video traders we are going to look at what makes us keep trading after we hit our daily loss limits if you're a day trader or scalper you might be in a situation you hit your daily loss limit and for some reason something in your mind says to keep on

Trading let's examine what it could be and we come up with a solution stick around hey traders welcome to you thank you for joining me okay so you're a day trader you're a scalper you've got a daily loss

Limit and let's say you've hit the lost limb and for some reason you've carried on trading now two results out of that one is you get away with it

You keep going and you kind of claw the money back and you stop the other is that you're not getting a real heavy hammered day and some reason you just stop or you end up blowing up an account

Now we've probably all been in in these situations especially if you're a newer trader when the discipline is not quite there yet we can often keep trading and keep trading and you might have

Had a couple of days in your career that has been so bad that if you could eliminate those you'd probably be actually quite profitable over your period of time you've been trading and so what we want to do is we

Want to try to you know because what i like to do from a personal perspective and i'd also like to do when i'm to speak to other traders about solutions and

I'm trying to get things fixed is is to work out why we're doing something so we're not going to go all psychology on us and and kind of sitting on um couches and and regressing

Back to all sorts of different times in our lives we're just gonna be more solution focused and think why are we doing something and then maybe we can attack it and come out with uh you know

Address the problem so the first thing is desire to get it back i think that's the big one i think let's say let's just use some numbers here let's see your thousand dollar

Daily loss limit on your day trading and you hit that thousand let's see you go over a little bit you might be like you know what i want to get this back i want to get my account accuracy back to

Where it was before and you know it's frustration very often this daily loss limit often comes after a period of drawdown anyway this is kind of how generally it works you're very rarely going to be a

Watermark highs with your equity curve and then all of a sudden come down and hit your day loss and it happens but you're more likely to be disciplined than to protect things generally speaking you fit your daily

Hit your kind of high water mark of your equity curve and then you come down a little bit and then you hit a daily loss limit so it's almost like a capitulation on the pool back on your equity care if

You like and so very often you think i'm so far away now from my equity curve highs you know i want to get it back you know you switch modes in your brain and the desire comes to be right i want

To get it back when i get back in so it's a kind of a form of revenge trading um and and then of course once you're in that mode if you have another loss you're kind of damaging if you have a profit you feel like hey i'm nearly

There and it's just it's just a bad place to be the second thing is i've broken one rule so may as well carry on so let's see let's take that example of a thousand dollar loss limit let's say you

Close a trade and you're down 1100 for example you might think oh well i've broken the i've broken that rule now it doesn't matter to carry on or maybe you've over traded

Or maybe took a trade you shouldn't have done or broken a rule to cause this drawdown and so you kind of justify in your mind you say well i've broken one rule i may as well just carry on and

That's just a dangerous thing to do um you know we could get analogies in in you know daily life as well you know we talk about health and talk about

Fitness and diets and stuff like this you can imagine if you'd say well i didn't go to the gym once this week well that means i'm not going to go for the whole month it just doesn't make any sense oh i've i've had

One piece of cake when i said it wouldn't be i may as well have the whole cake and this kind of sounds silly when he's standing and saying this is human nature guys saying we're training sometimes we think

If we break a rule well i might as well have a big rule break day but end today you still got your capital at risk it's something to re-frame in your mind at least um third thing is despair at performance

So perhaps similar to the first thing if you're drawn down for equity highs equity curve highs and you're just feeling pretty rubbish about your

Trading you know it's not going so well or even if you've just been drawing down drawing down just kind of the final straw and the desperation of you know i just can't get any profit i can't seem to get

Any traction it's not working out for me you know that sometimes can just overrule any little bit of discipline you happen to have and just say well you know what just swing for the fences just go for it you

Know we can get it doesn't matter now we can get back to highs um your performance isn't very good you can't trade very well you must just go for it now and it again you're kind of moving away

From the professionalism aspect of trading right into the gambler's mentality so you know be careful that one fourth thing guys is i'm in so deep now you have nothing to lose

This is a classic classic one i've lost so much i'm down so much i'm down you know way more than i wanted to be it doesn't matter now this is generally when you've really

Broken a rule since you've got a thousand buck lost limit maybe you're down two or three and you're like i'm down three what does another 500 bucks matter then you're down four wasn't that

You know 100 bucks matter and before you know it you're down so much you're thinking well what does it matter if i'm down 10 grand i'm already down i'm already down six and so you start thinking

Completely irrationally and and crazy of course difference between six and ten is huge when you were lost it was one at any point you know it's still okay to cut it and go enough's enough

I'm out so you know that thinking as well needs to try to be rewired and said even if i'm down way more than i expected at any point i can still cut and call it a win that i didn't lose

More yes i can't call it a win on the day i'm not going to pat myself too much on the back because i broke the rule however if i'm down two and i'm going to be one that is better than being down

10 or 15 or 18 or whatever which it could have been if i just kept going and going and going and going so you know bearing that in mind as well the fifth thing guys is disciplined muscle's not engaging so

This kind of summarizes the whole of this and really you know something that you know helps me a lot and has helped me a lot in my trading is to just really try to exercise their discipline

Muscle in training outside of trading so in training let's talk about this for now and we kind of cover this loads in the traders mastermind guys i know some of you on the waiting list now um it might be there's anybody watching

This if it's open it's open links in the description below uh if it's not there's a way to list and we'll reopen it as and when but in there we talk lots about discipline and just how to improve your

Trading discipline so if you haven't really got that disciplined muscle and you're not engaging it you're going to be weak in many areas you're going to have a situation where

You're down a thousand bucks you're down 1100 and all of these kick in you get frustrated in performance you think that i've broken the rule i might as well carry on and then you get so far that

You have nothing to say is it all cascades whereas when you start to become more disciplined in your training you're doing little exercises just to stick to it it's to stick to

Discipline and improve the discipline you become so much less vulnerable to this even if you do feel despair or trading you still have a discipline that says hey i identify as a disciplined trader

And so therefore there is no reason for me to be digging myself for the whole i may feel disappointed with my performance i may feel despair at my performance i may feel like i've broken one rule and

I may as well carry on but ultimately because i've been flexing the discipline muscle with all the drills all the training all the stuff and just done the right thing for as long as possible

It now goes against the grain against your morals to do something that's way out of sync with your rules because you're so aligned with it so you know flexing the splint muscle doing things every

Day in your trading that just makes that discipline muscle that much stronger sticking to the rules stopping trading at a certain time um stick making sure that you don't trade a position size you shouldn't do

Uh making sure you don't trade a market you shouldn't do a trade setup you shouldn't do journaling when you said you're going to do doing a trading plan all these kind of things

Sticking to that builds the confidence builds the discipline then when the chips are down things are getting stressful you're down off your equity curve you're at your max loss limit in the day

That's when you really dig into your discipline and go you know what call it a day the lost limits there for a reason let me take stock and that's when you have a chance to make it back over time it's when you start losing it all you

Start punting away you start hitting it in size you start hoping you start not caring nothing to lose desperation uh when things just get really really nasty all right guys i hope you enjoyed this

One i think if you're a day trader you've probably been in this situation before have you handled it let me know let me know in the comments section below don't forget to check out our

Channel sponsor guys the link to them in the description below too take care bye you

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