Why Your Ego is Sabotaging Your Success
As human beings, we all want to believe that we are smart, talented, and liked by others. We need the sense of validation - that we are good enough, smart enough, attractive enough, or whatever. Humans have always been competitive, i.e. from an evolutionary standpoint, being the best hunter, the best fighter, or the most clever - this was how you stood out, and inevitably reproduced. In school, we also praise the fastest, the smartest, and the strongest. We feel the lure of affection, idolism, and admiration. We feel insecure about ourselves if we are under-performing relative to our peers, and envious toward those who "have the cake."
As traders, the last thing we want to feel the embarrassment from our peers for having a down-day. We often conceal our losses, and forego sharing important decisions that caused us to lose money. It is embarrassing! I'm sure every person reading this has had at least one day where they go back and look at their trades, and thinks to themselves, "what in God's name was I thinking?" Many of us don't even want to admit the problem to ourselves, often neglecting to look over previous trades, missing valuable learning opportunities in the process. We also feel anger about losing money, so we often don't like to feel it all over again, because it reminds us of the pain and frustration we feel in light of our "ideal" self. We often like to shirk responsibility, blaming our losses on algos, stop-hunters, or our tools. If you learn to take responsibility for every result (unless it's just bad luck - in which case, there's nothing you can learn from it anyway), you will fare better in facing your demons.
Every great traders has had - at some point - a substantial loss. If you read "Market Wizards" by Jack Shwager, you will read about the dozens of legends that were borrowing money from family, making newbie-mistakes, and almost quit the business. This is not just commonplace - it's inevitable. Although you could say that the most important thing is get up off the mat - and I completely agree with that fact. However, I think it's equally important that you own it. You ARE going to resist, want to move onto the next trade, to be too tired to review, or let your ego stop you. This is OK - for a time - but once you are done venting or ruminating, it's crucial that you own your mistakes. Otherwise, you are bound to repeat them. If you need an ego-boost, I definitely recommend reading Market Wizards. It's absolutely fantastic, and you will see yourself in a lot of the legends that have thrown some very serious weight in the market.
One exercise that can be helpful is imagining that your friend took those trades instead of you. What would you tell them? Would you feel that those trades somehow reflected their abilities? No? Then why treat yourself in such a manner? Does taking losses mean that you are a "bad trader"? Absolutely not - just like learning an instrument, you cannot master a guitar without first missing at least a million notes. Then - and just maybe - you will find yourself amidst a perfect guitar solo.
Trading is a zero-sum gain. In Futures, the money that goes into your account comes directly out of someone else's account. No one likes to lose. That means that our if our competition catches just 10% more mistakes than we do, then they already have an edge (that we lack). For this reason, it's important that we take responsibility for our failures, as much as our successes. We all like to share our P/L when we have had good days, feeling that it somehow reflects upon our abilities as traders, and as people. If we take accountability for our mistakes, however, you know what we get? Respect. It takes courage to let it all to bear. We also get helpful feedback from our peers that are more insecure competitors will be devoid of (and will continue making the same mistakes). Furthermore, the best traders will forego celebrating after win, and even putting their successes under the magnifying glass (because making money does not always equate with probabilistic decision making. Luck is always a factor).
It can be helpful to form a solid group of guys that you trust, whom you can reach out to that will be blunt with you. You never want to create an "echo chamber" where your friends only tell you what you want to hear, or are afraid to hurt your feelings. I recommend giving them a screenshot of your chart and entry bar, but take off your order markers (if you can) that way they don't know what you did (and simply posing the question, "hey, what would you do here?"). You can also post screenshots videos to YouTube, or Facebook, and see how other traders would have dealt with the situation. And, if you want to get really heavy, you could consider streaming on Twitch or YouTube, so you know you always have somebody watching, and are less likely to s**** the bed (hah).
If you'd like more information on how you can own your mistakes, I definitely recommend the book "Extreme Ownership: How US Navy Seals Lead and Win." It's got some great content on how to do all the above!