Scalpers remorse. It doesn’t seem to exist, at least not in the world of Google when I search for it, unless you’re looking for a PlayStation 5. But trust me it does. I know, because I suffer from it. There is only one person I have heard refer to this phenomenon, and that is the high stakes trader Tom Hougaard.
So, what is it?
If I had to write an official description for it, I guess it would go something like -
‘The act of feeling sorrow, regret, or sadness upon the quick closing of a trade, only to then observe the market move considerably further in your favour to a level far exceeding that of your actual realised profit’
There is an unofficial description, but that contains a fairly great number of expletives and those with any imagination can pretty much write this one for themselves.
Scalpers remorse is an affliction which has symptoms that can vary quite wildly from trade to trade and day to day, and that can be magnified or reduced by any number of internal or external influences. Sometimes it’s nothing more than a wry smile, a raise of the eyebrows and a short, sharp ‘Hmmm’. Other times it can be anger, dejection, depressive sadness, or worst of all laptop slamming frustration complete with the clenching of fists and a desire to break something.
So how does it affect trading and what can be done to combat it?
In my very limited experience of trading so far, I have found that the affects can be numerous. Anything from chasing the market, revenge trading, overtrading, and the worst one of all, ceasing trading, are too name but a few. When reading this brief and non-exhaustive list, it is apparent they all share one common theme. Every one of these actions is the complete opposite of ‘good trading’ and that is what we should all be striving to accomplish every time we sit down ready to trade. To describe it another way, in poker parlance we are ‘tilting. Now if you’ve watched any Poker after Dark or High Stakes Poker episodes that had Phil Helmuth in them, you’ll know that tilting is not exactly congruent with winning. Essentially scalpers remorse, if left unchecked, can take you from the 10% club and plonk you firmly in the 90% club which is right where we don’t want to be.
So how do we combat it?
It’s not easy I can tell you that. And how do I know this you might ask?
Well, because I suffer from it. Unless I am one of the world’s most naturally gifted traders (nope!), I’m susceptible to it simply because I am so new to trading and the effect that trading has on me emotionally. My little experience that I’ve gained so far means this is a completely new feeling to me, and not something I’ve come across anywhere else in life, outside of trading. So, how do I deal with it?
It all comes back to Mindset. As I write this, I realise that I may sound a little like a broken record as several of my other posts refer to the importance of mindset in trading, but this is a record that needs to be played again and again, until you know the words to the song off by heart, and you come to appreciate the repetitive skipping of the needle on the scratches. I have tried to adopt something similar to Tiger Woods’s reaction to hitting a bad shot into my scalping. It is said that when ever he hit a bad or errant shot, sure he would get angry and annoyed at that specific moment, there are plenty of videos and clips on YouTube to attest to this, but he would make sure that he would put it out of his mind no more than ten steps down the fairway. After those ten steps the shot was forgotten, he had a full mental reset, and his only thoughts were of the next shot.
To translate this into trading, when I place a scalp, take my profit, and then watch as all of those unrealised phantom points flash before me, I let out a little frustration at the time sure, but then I close my eyes, breathe in slowly through my nose and out through my mouth, and say to myself - “I am in profit. I didn’t lose anything. The market will ALWAYS present opportunities to make money many, many times a day. Abundance flows to you at ALL TIMES. You can either choose to allow it or resist it. But know that in allowing it, life is so much better.”
I will then open my eyes, look at the chart, take a deep breath in, exhale, and look for the next signal and the next trade and try (remember I am new to this), to have a full mental reset, and treat the next trade as if it were my first trade of the day.
I understand from a personal point of view that this is much easier said than done, hence the ‘try’, but everything in life takes practice to show improvement and mindset is no different. You must practice maintaining the right mindset as much as you practice reading the charts and their patterns, if not more so.
Like Tiger once said, “Winning is not always the barometer of getting better.’
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