When the going gets tough

As a trader there will be times when the ride is going to get rough, a series of losses will strike your trading system, and thus there will be no positive cash flow. Worst thing that hits a trader is that, it's the trader who has executed all the trades and which has resulted in losses, so that adds to the burgeoning stress. The trader feels frustrated, demotivated and his mind looms with all kinds of negative thoughts. He might also start to question about his choice of being a trader, was is the right choice did he make? After all no one supported his decision of being a trader. All of these thoughts constantly run in the trader's mind, through out the day and if he one of those unlucky souls, then these thoughts does not leave him alone even in the nights. Those peaceful days and nights are gone for the trader. 

This is what the phase of draw down does to a trader. Draw down is a period when a trader goes through a phase of loss, that is the trader is not able to make profits higher than the losses and thus his equity curve does not see new peaks. Usually this phase can last for months and for many big traders and hedge funds it can last for even a year. And most of the traders never get out of this phase, that is never make new equity high. Never claim back the lost capital. More one tries to recover from the losses more one makes loss, and these losses pile up so badly that the trader looses all hopes to see his capital to grow back to the initial levels.

This is the time most of the traders breaks down. Start to seek for trading gurus, sign up for any cheap trading course by anyone who claims to only make profits in the markets. The trader looses common sense and is in a trap of the devil within. He is so shaken that he does not anymore believe that the basic market principles. He believes that the nature of the market has changed suddenly, especially after he has started to trade. So the mighty trader either quits and comes back later with a strategy to suit the new market conditions or does some kind of tweak to his existing strategy. I do not have to put it in words what happens after this, experienced and even new traders know what happens next. 

The basic thing which is not addressed is that stock market is not a money minting machine, it is like a normal business which has its own cycles. No trader can ever skip the down cycle as long as one is in this game. The only way to emerge as a winner in this field is to accept the conditions as they are. The market is what it is.