There is a verse in Rudyard Kipling’s poem “If” that I find particularly meaningful:

If you can meet with Triumph and Disaster
    And treat those two impostors just the same;   

Replace Triumph and Disaster with Wins and Losses, and the verse speaks to me of the ideal trader mindset:

If you can meet with Wins and Losses
    And treat those two impostors just the same;   

When we have a winning trade, we feel happy. Proud even, that we have made the right call. But I argue this is not the right emotion. In fact, we should not have any emotion involved. It is better to bring our hearts back to a neutral state, so that we can focus on our trading process for the next trade.

Likewise, when we have a losing trade – or a streak of losing trades – we feel sad. Possibly angry. But it is not the right emotion either. It is better to let the feeling and raging hormones dissipate, so that we will be in the right frame of mind to execute our next trade with clarity.

The next trade should NOT be encumbered by the last winning/losing trade.

If we can face our wins and losses with subdued emotion and we acquire the mindset that wins and losses are nothing more than probability events in trading, we will become better (and profitable) traders over the long run.

TMT