How Long is Too Long to Not Be Making Money?

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Dear Bella,

Thank you for all the great ideas that you share on your blog. It is a great tool for trader improvement all around the world.

I see you helping so many beginners, so I’m sending you this e-mail with the hope that you can help me as well. I’ve been trading for the last 10 years of which the last 4-5 I’ve traded full time. Over the years results were great and I pulled lots of money from the market. But for the last 18 months I’ve been struggling big time. Volatility dropped and my trend-following system that produced nice profits simply went into sideways mode. From October 2011 I’m breaking even when it comes to profits.

Of course one trouble does not come alone; somehow during this period I completely lost the vibe to learn something new and to change something in my trading. I know the reason for this. Over the years I changed a lot and tweaked my systems. Whenever I hit drawdown I would look for another system and change to it. That would happened exactly as drawdown hit the peak, and while the first system was recovering nicely I would trade something else. So now I’m afraid that I would stop trading a major system just as it starts to work.

I know that you and Dr. Brett Steenbarger suggest that dry periods can last 2, 3 years for a trader, but what can I do to keep motivated during those periods?

Thank you very much for your time.


Thxs for sharing. A very interesting anecdote for the trading community.

A very wise, veteran trader said to me recently, “Low volatility tends to make a lot of trading systems ineffective.” With trend trading this is obviously true as the follow through required is often absent.

Start with the premise that someone, somewhere is making money as opposed to the mindset that so many are struggling and underperforming; therefore, it’s not uncommon that I am. I wrote in One Good Trade that I have changed my trading style many times during the course of my career. What works one year, one month, one day may not work going forward. The past is not indicative of future performance (so goes the financial disclosure).

In The PlayBook I encourage traders to keep track of what is working for them. For example one veteran trader I am mentoring crushed CLF yesterday and then caught WDAY today. Make a big deal of your best setups. Archive them. Obsess about how to find more opportunities like this and how you can trade them bigger. No matter what the market is it doesn’t take too many setups to make real money. GMan loves The Pullback Trade. Just this one setup is enough opportunity for most in a month.

Dr. Steenbarger would encourage you to further consider how the market structure impacts your trading setups and system. Your system for this market structure may not work. You must be able to identify the market structure first and then trade the setups that work best within that structure. Too many miss this point and skip straight to the setups. First comes the market structure, and then comes the setups.

For me 18 months is beyond way too long to not be making money. And 18 months is probably too long for my wife :). A few months would make me reevaluate my trading. This can differ based upon your trading time frame. The longer your time frame the less often you will evaluate your system.

There is always a solution to your trading underperformance. There is a wonderful chapter in The PlayBook, “Prep: Proving You Can Make Every Mistake in the Book”, that demonstrates this point. Understand the market structure. And find the setups that make the most sense to you for this market.

I hope that helps.

You can be better tomorrow than you are today.

Mike Bellafiore

The PlayBook

One Good Trade

no relevant positions

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