I used to think losing streaks were caused by the market. "Gold is random right now." "My strategy doesn't fit this environment." "I need to find a different setup." I would tweak parameters, switch timeframes, change my entry criteria — and the losses would keep coming.
Then one evening at my desk in Singapore — it was around 2AM, I had just taken my third loss of the day, and I was angry — I flipped back through my physical notebook and looked at the losses not by strategy, but by what I had written in the "State of Mind" field.
The pattern was so clear I felt stupid for not seeing it sooner.
What I Found In My Notebook
I don't have a color-coded spreadsheet or a statistical breakdown. What I have is a notebook where I've been writing one word at the top of every trade page for the last 5 years: "Focused," "Tired," "Anxious," "Overconfident," "Frustrated," or "Calm."
I didn't start doing this because I was smart. I started because a mentor told me to try it for a month. I kept doing it because the pattern emerged fast.
When I flip through the pages where I wrote "Frustrated" or "Tired" at the top, the trades are predominantly red. Not every single one. But enough that the pattern is visible to the naked eye.
When I flip through the "Calm" and "Focused" pages, the red still exists — no strategy avoids losses — but it's spaced out. A loss here. A win there. Not clusters of red pages.
The clusters — three, four, five consecutive losing trades — almost always start with a page that has "Tired" or "Anxious" or "Frustrated" at the top.
The Emotional Spiral
Here's what a real losing streak looks like from inside my notebook, reconstructed from a 2023 sequence:
First loss: a normal trade that didn't work out. I wrote "Calm" at the top. Fine. Part of trading.
Second loss: I felt the frustration building. I wrote "Annoyed" — not one of my standard words, but I wrote it. I took the next trade anyway.
Third loss: "Frustrated" at the top. At this point I should have stopped. I didn't.
Fourth trade: I took a lower-probability setup because I wanted to "get back." "Anxious" at the top.
Fifth trade: I oversized. Broke my 2% rule. "Reckless" — another non-standard word that tells me everything I need to know about my state of mind.
Five consecutive losses, but they weren't caused by a bad strategy. They were caused by one normal loss triggering an emotional cascade that I didn't have the discipline to stop.
The strategy was the same for all five trades. The variable was me.
What I Changed
Three changes, and none of them are complicated:
1. The state-of-mind field became mandatory, not optional. I don't enter a trade without writing one word about how I feel. If I can't name my state, I don't take the trade. This simple rule has stopped me from entering dozens of trades that would have been losses.
2. I set a hard stop after three consecutive losses. Not a suggestion. A rule. Close the charts. Walk away. Come back tomorrow. I've broken this rule exactly twice in the last 4 years, and both times I regretted it. The rule works when I follow it.
3. I started reviewing by emotional state, not by strategy. Every month, I flip through my notebook and look at the losses grouped by state of mind. "Frustrated" months always have more red pages. "Calm" months always have more green. This is not a coincidence. It's a feedback loop I can act on.
The Philosophical Layer
There's a line from the Tao Te Ching that I've been thinking about since that 2AM realization:
"He who knows others is wise. He who knows himself is enlightened."
I spent my first 5 years of trading trying to know the market. I studied indicators, patterns, cycles, correlations. I knew others' trading methods better than I knew my own triggers. It made me knowledgeable but not profitable.
The second 5 years taught me that the market is a mirror. It reflects back whatever you bring to it. If you bring calm, you see structure. If you bring frustration, you see chaos. The market didn't change — I changed. And my P&L followed.
An Honest Exercise
I'm not going to tell you to install a mood tracker or build a spreadsheet. Here's a simpler challenge:
Take your last 10 losing trades. For each one, write down honestly what you were feeling before you entered. Not what you think a trader "should" feel. What you actually felt.
Then look at the list. Do you see a cluster? Three losses when you were tired. Four when you were frustrated after a personal argument. Two when you were overconfident after a big win.
You don't need a complex system to fix this. You just need the honesty to see the pattern, and the discipline to stop trading when you recognize it starting.
I still have losing streaks. But they're shorter now. And when I flip back through my notebook, I see fewer "Frustrated" and "Tired" pages. That's progress.
--- Lin