When markets turn fast and furious, as they did last week, they cause extreme emotional responses from traders. These are often very traumatic experiences and knowing how to handle these emotions is key to profit and to minimize losses.
The good Dr Brett Steenbarger explains in his blog how journaling can help getting over traumatic experiences. If you had large losses last week, step aside and take some time to write as much as you can about the experience in your journal. Write down your thoughts with as much detail as possible describing your feelings as events unfolded. Write about any relationships you find between your thoughts and feelings and the trades you placed and their outcome.
Read your entries out loud and identify negative behavior that might have lead to bad trading and losses. Did you over trade? Did you revenge trade? Did you respect your stops? Did you even have any stops in place? Did your risk management system work? Once identified, outline a plan to take corrective action and begin training to become a better trader. In the StockTradeJournal site I have placed a number of very good resources on the Internet that can help you become a better trader. Take a look at them here.
