All types of traders have different emotional responses to winning trades as well as losing trades. The mindset of a winning trend follower is much different than most. There is no excitement on a winning trade nor emotional distress on a losing trade. The reason there is no excitement on a winning trade is due to the humbleness of the winning trend follower. He or she did nothing different. They were consistent in their plan and the market moved. The reason is very simple why these small group of winning trend followers succeed. The winning trend follower has an exact plan and knows that he is playing the odds. He or she keeps their losses small…or try to do so…however there will always be gaps or limit moves against them. There is only 4 possibilities when we trade:

big losses
big wins
small losses
small wins…

The key is to “try” to avoid the big losses…the small losses and small wins negate each other and rare times you “stumble” into the big winners. This is what I have personally experienced. You can never avoid losses or draw downs. They will always happen.

It is funny..I am asked always what is the “optimal” number for an ATR Trailing stop…or moving average…
The answer is one that they can follow! The mind of a trend following winner is always a work in progress. Even for myself, I teach because it is a way to reinforce my discipline. I write this blog because it reinforces my thinking and my mindset. It is never easy nor is trend following for everyone.

Past performance is not indicative of future performance