The current market is one of the toughest I've traded in my career of over 25 years. I'm not going to go into the many reasons for that, but the frustration among many traders is at the highest levels I've seen since the bear market that started after the dot-com bubble burst in 2000. The 2000 bear market pushed many individuals out of the market, and a large number never returned.
The current market action is not a technical bear market for the indexes yet, but more and more individual traders are giving up as the stocks that they favor having been the hardest hit. They have been worn out by this market, which has offered only limited opportunity for a very long time and is not showing any signs of recovery in the face of a host of macroeconomic negatives.
When traders go through prolonged struggles, it's tough to see that down cycles like this are just the nature of markets. There always have been and always will be ups and downs.
Many folks are frustrated and depressed and are giving up, but I am absolutely certain that conditions will shift and that the ability to produce substantial returns. It is never different. The market goes through a period of pain, but it eventually lifts, and we wonder why so many stocks were sold without regard to their individual merits.
So how do traders survive and prosper as they deal with these cycles that cause such distress?
Learning about trade management and how to protect capital is exceedingly important, but there are two things that will determine your level of success more than anything else: Persistence and a positive mindset
Those that slog away day after day and remain optimistic that they will find good trades are the ones that will succeed.
To be a great trader, you must be extremely persistent, and you must cultivate positivity. Positive thinking does not mean that you are foolishly optimistic. It means that you are confident that if you persist and work at it, then positive results will eventually arrive. I have no idea what the market will do in the weeks and months ahead, but I am very confident that opportunities to make substantial money will eventually develop, and I will benefit from them.
It is important to recognize and embrace the fact that if the market was easy, then it would not be so potentially lucrative. You can become rich from trading only because it is hard and recognized intelligence and hard work. Luck will happen, but only if you are willing to preserve over a long period of time.
I am often greatly annoyed with traders who wallow in misery and are constantly whining about how things are never going to improve. I suspect that complaining and pessimism are their way of relieving the stress of tough times, but the problem is that a negative mindset robs them of motivation and drive. It makes them less likely to keep on pushing when things are miserable and leaves them unprepared when conditions do change.
What keeps me going when things are rough is that I am absolutely confident that the market is going to shift and offer us some fantastic opportunities again. I've been through numerous cycles over the years, and it is glorious when the cycle starts to improve, and a new uptrend develops. It will happen.
My German Shepard Molly is a good role model. No one gets between her and her bone, and she is always confident that another one is coming. Persistence and a positive mindset will get you through the tough times and put you in position for long-term success.
