Dealing With Pressure and Regaining Momentum After Taking Hits

Reflections from MoistMango

This one will come more from the heart.

Here is the truth- I have felt under pressure over the past few months.

Bad habits and existing baggage found their way into my trading. A drawdown ensued. Being in the wrong headspace creates a negative feedback loop where everything becomes heightened. In this state, negative traits surface which include:

• Not letting winners ride in an eagerness to lock in some profits

• Desire to make it back by chasing weaker setups with little edge

• Losses lead to withdrawal and defensiveness which means under-sizing the next real A+ opportunity.

Pressures bleed into personal ones. As traders, our identity gets so wrapped up in our performance that when this suffers, everything seems to fall to sh*t.

I felt all these things.

The whole point of writing this newsletter was to show the realities of this career with the highs AND the lows. I am conscious of recent report cards and trade write-ups of huge opportunities that glamorize what is going on behind the scenes. It has been far from this over the past few months.

Over the weekend I listened to an excellent interview with @MoistMango12 which had a profound impact on me¹. Here is one of the best current traders in the social space detailing in full transparency his drawdowns and the mental toll it took. Despite making $USD10m in career earnings, he spent 18-24 months grinding out of a $3m drawdown from peak to trough. At one point he was risking $100 a day. He grinded. He chipped it back. This puts everything into context.

Every trader is going to go through turbulent periods.

What this episode showed me is the importance of just trading well. You have to regain mental capital to be able to swing from a position of strength. My trading through August was far from perfect but I found some rhythm once more to grind it back.

Here is what I further learned from this podcast, my own recent experiences, and some action steps to rebuild momentum after setbacks. This is an invaluable skill every successful trader will need to master at some point in their journey.

Recent drawdown:

(*Gross numbers only so take off what you will. Illustrative only.

(*Update 2: doesn’t include a CTT rip on Monday argh)

Face your reality and assess the damage

The only way to deal with problems is to recognise them and face them full-on.

It is uncomfortable to do the deep reflective work. You question yourself and how you could be so idiotic in that moment. That is just part of being human playing in a probabilistic game.

Setbacks are like a sports injury. The only way to heal is through rehabilitation.

Try to objectively assess what’s been done and how bad the situation is. What is still intact? In his first drawdown, MoistMango had built a tonne of bad habits that he hadn’t fully resolved. He froze in the moment and didn’t take his stop loss when shorting the Dryship sympathy plays. This led to an outsized loss. He was on the path to becoming a consistently profitable trader prior. He knew he had some edge. It was grinding it out, learning from these mistakes, and then positioning for the new Cypto boom that made him flush once more.

In a similar vein, I know how to trade and I know I have an edge through years of experience. It was my dumb ass mistakes, unresolved patterns, and a lack of meaningful application that stood in the way of achieving results. I went through an assessment process and detailed my problem patterns with solutions here. I made a drawdown plan also shared on these pixels.

Dealing with trading problems is just one part of the equation. Addressing personal stress is very much another. It is almost impossible to perform with external pressures in the background. Again, the solution is to take stock of what truly impacts you.

I always seem to be pushing and striving for something. Harder workouts, more competition, deeper reviews, and extra information. This invariably leads to more stress. What I needed was to increase compassion and to slow down. I reached out to a friend and performance coach, Andrew Hosken, who recommended the Sam Harris meditation course. I started to feel an increased sense of self-awareness and calm. I built a financial plan to address shortcomings in the period of drawdown. I spent more time writing and reading to unwind. Slowly these routines helped.

The point of this story is to not cry “Poor me”. We are all experiencing our unique issues at different points in time. However, running away from problems and shutting down into a Netflix series does no good. Instead, focus on what you can control through a plan. Following the process is about executing one small step after another. These rebuild a feeling of control. Moving it forward incrementally rather than looking at the big picture is the only way to get your head in the right space to then execute edge.

Build Edge. Wait for Edge. Swing

You need to trade from a position of mental clarity to fully capitalise on the best opportunities.

When asked about his strengths, MoistMango replied:

“I can put together a large set of discretionary variables, like a puzzle, to create a picture and then build conviction to put on size in the best opportunities.”

As discretionary traders, that is our job right there. To weigh up the most meaningful catalysts and create rules or a system to execute. This ultimately comes through constant screen time and application.

The overwhelming questions I have received from readers to date are how to find the right stocks to trade and how to build an edge. As a stocks in-play guy, the easiest answer to this is simply to find good catalysts! From this, you can trade a style that aligns with your strengths:

→momentum

→fading via buying or shorting extensions (non-advisable)

→technically using patterns or indicators

→scalping off the order flow

→holding for multi-days

→quantiatively using backtested analytics

→playing in corners with less competition and less regulation e.g. specs

The key is to formalise this all into a set of rules that you can demonstrate has real-world impact. Why would this trade work? What is going on to move the market? Backtested data helps to cut through the noise to give a background. If you can’t do this then rip through countless examples to validate. See what other traders are doing and having success with. Reverse engineer those and systemize it all. Use technology and infrastructure to improve access, speed, and information-gathering processes for these setups.

MoistMango puts up some of the best US trade write-ups with specifics that have now got me exploring new playbooks and areas of growth.

For the Australian-based traders, here is a snippet of the trades that worked for me during August:

Invariably, I will make money when that big fat juicy catalyst comes along that I just can’t miss no matter how badly I trade. DRO in July and LRV in August come to mind. Given I was not trading from a position of strength, I did not fully maximise these. That is why trading well prior is so important! However, it got the ball rolling to build momentum.

It is about sitting there waiting for the juicest variables to all align.

Build the survivor mindset

I hated myself for the mistakes and the performance. But it happened and I made it to the other side.

MoistMango went from drawdown to making a lazy $1.6m shorting NVDA in July.

Once you have come through setbacks, you have owned your scars and it is time to use them to your advantage. Dr Julie Gurner calls this adopting the “survivor mindset” rather than a victim mindset. It is the difference between those who rise beyond adversity and those who crumble².

The survivor mindset is someone who:

• focuses obsessively on the solutions

• feels they must overcome problems

• takes responsibility for the next steps

• engages in self-talk to build resilience

This comes from taking inventory of the recent setback. The mistakes, the judgment, the self-flagellation. It is about recognising how much you have overcome and being proud of it.

What I learned from my drawdown:

• Slow down, trade less, and increase trade selection. The default position should be the sidelines.

• Reduce overnight positions as they have high variance. I only make money in my systematic overnight playbooks

• Auto-load stops and take them in FULL. My tendency is to just take off 1/2 which is not actually commiting to being wrong.

• I am at my best when planned via my tools. I fall apart when I react to a move

Control what you can

Trading is going to serve you some hits.

You cannot choose what happens, but you can choose how you respond to it. Through hard work and focus, the results will take care of themselves. Fortunately, this profession does offer lumpy payouts, you just can't control when that moment will be.

The best option to move forward is in this very seat but you just have to be able to survive like Mango.

If you enjoyed this article, I will write a follow up part 2 with more lessons and takeaways from the Traders Underground interview with MoistMango.

1. Moist Mango interview with Investors underground: https://x.com/IUTraders/status/1811884738896155006

2. Dr Julie Gurner “Ultra Successful” Substack: