Recently I came across my copy of Awaken the Giant Within, by Tony Robbins. I originally bought the book 10 years or so ago, but after reading it once, I pretty much forgot about it until I came across by chance, gathering dust.
Over the last few years, I've become greatly interested in the whole self-help/psychology sphere and the impact it can have on a traders' mindset. This can ultimately determine whether a trader will become successful or not in the long run. And, in the meantime, I've read a whole bunch of books related to that topic. Re-reading Robbins' book shows where a lot of these ideas originally came from or became popular.
"My metric for everything I look at is the 200-day moving average of closing prices. I’ve seen too many things go to zero, stocks and commodities. The whole trick in investing is: “How do I keep from losing everything?” If you use the 200-day moving average rule, then you get out. You play defense, and you get out." - Paul Tudor Jones
The above excerpt comes from PTJ's interview with Tony Robbins, which appeared in the book Money: Master The Game. I've not read the book, but I've seen this paragraph quoted enough on social media.
It is an unfortunate part of trading that people can suffer the traumatic experience of losing a significant part of their equity in one go. In extreme examples, some traders may even blow up their account. This may be as a result of some major unexpected news coming out. It may be as a result of your broker putting most of your money in a downtrending stock. It may be because you took a big position just before earnings were released which then gapped against you.
When something like this happens, your mindset will take a battering, and before you commit any fresh funds to the markets, you need to step away for a while and regroup. As hard as it may seem, how you deal emotionally with what has happened is of paramount importance, and may even determine whether you can make money in the future.
