During Navy SEAL training, instructors often admonish trainees to "Embrace the Suck!"
Embracing the suck acknowledges that pain and suffering are inevitable aspects of almost everything we do in life, but it's up to us how we react.
There will always be outside forces that cannot be controlled, but what we can control is how we perceive and react to a situation. The reflexive reaction for many people is to run away and hide when things become difficult, but that often leads to more problems.
In stoic philosophy, there is a saying, "The obstacle is the way." Look for the opportunities that arise from adverse conditions. Accept that bear markets and losing streaks suck but are also a necessary and inevitable part of the market.
Traders must understand and embrace the idea that a challenging market isn't a personal attack or a reflection of their ability. It won't last forever and is a positive as we find ways to improve the situation.
Be Mentally Prepared to Act When the Trading Action Improves
Poor market action is a boon to opportunistic traders with the right mindset. New opportunities become increasingly sparse when the market runs straight up.
The truth is that bear markets create conditions where traders can subsequently make significantly more money. When the action is at its worst, you can be confident that the potential opportunities are multiplying. The important thing is to do the research and prep work and to be mentally prepared to act when the price action has improved.
Those who suffer the most in a challenging market with normal ups and downs are the perma-bulls who think that markets should never experience any significant downside. If they are true buy-and-holders, then they ignore the market gyrations, but many perma-bulls suffer tremendous anxiety and financial losses because they're simply incapable of appreciating the necessity of a two-way market. For these folks, up is always good, and down is always wrong, but the down-side action is what creates the best opportunities.
The critical point is that bear markets feel very different for those prepared to react by taking defensive action as the price action deteriorates. Too many market players feel like they have some unique insight into the market or have such a deep understanding of why a particular company shouldn't do anything but go higher that they end up fighting the poor action and ignore that their stocks are breaching key support levels. However, those who defer to the price action accept that near-term losses are part-and-parcel of trading and honor their stop levels will have a different attitude about the market as we protect capital and prepare for when the action inevitably improves.
It's impossible to know how long bear markets will last, and there's no use in trying to perfectly time "the bottom." Along the way, the increased volatility around bear markets can create unique opportunities to profit for those who can tighten their timeframes and become exceedingly disciplined with position management (which I will discuss in a subsequent article). It will ultimately offer up fantastic entries for longer-term position trades.
Those willing to shift their mindset and "embrace the suck" will have a different and productive outlook during corrections and bear markets. Learn to love the misery. Don't just tolerate it and try to survive -- celebrate it, make it part of your existence, and use it to drive yourself even harder. If the market were simple and easy, it would not be so potentially lucrative.