Tom Dante

Tom Dante



How to execute when in drawdown A thread

Traders often ask me if I get fazed by drawdown. The answer is no. I have absolutely 100% conviction in my edge. I never lack conviction, even for a second. Fuck fear. Fear breeds losses.

I frequently speak with traders that suffer from drawdown related issues affecting their execution. If you're in drawdown, you must do your utmost to make sure it doesn’t affect your ability to execute your edge.

Sometimes traders get defensive when losing but often playing defence is synonymous with poor trading decisions. Traders see a setup and second guess themselves. Or they take profit too quickly to break a losing streak. Or they adjust targets to try and get out of drawdown.

You have to understand the market doesn’t give a fuck about your needs. You must trade the market, not where you are in your equity curve.

Every trader will have their resolve tested from time to time. However, good execution relies on confidence. Confidence is a state of mind.

So, this is the process I believe most effective to execute successfully during drawdown.

1. Accept what is happening Every trader will experience tough times. Times when they take loser after loser. There is no shame in being in drawdown. It’s the cost of doing business and only cunts on social media make losing a taboo issue.

2. Eliminate the fear of it continuing Your strength in the face of adversity, is what defines you in this business. To eliminate fear: Embrace loss.

I have a technique that works well for me. It's known as negative visualisation. Shut your eyes. Imagine losing your next 3 trades in a row. If you’re already in drawdown, this won't feel good. Work out how much it will cost you in money. Visualise the red numbers.

The reason you're doing this, is to eliminate the fear of losing. If you've made peace with the worst-case scenario, there is no fear.

3. Step up and execute If the market goes against you, so be it. But we live and die by our ability to execute.

So, tomorrow, forget about today. This trade is now. The last one is gone. Have no fear because there is nothing to be afraid of, if you have already prepared your mind to lose. Focus and keep to your plan. And you will come out of drawdown.

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