One of the most emotional parts of trading is watching your pair retrace, either working itself toward your stop or cutting some of your profits. So how do we survive the emotional roller coaster of retracements?

In order to gain big results, we must sit through some retracements.

The first step is recognizing that there is a retracement. The second step is realizing our emotional self and that self is fearful that price will go against us.

William Delbert (WD) Gann (1878 – 1955), one of the recorded greatest traders in technical trading grew up a Christian on cotton land.  At the tender age of 24 in 1902, he made his first trade in cotton futures and became a devotee of trading.

Studying many forms and movement of the markets, he concluded that the market was moved by ‘vibrations’.  He claimed that he could forecast the market’s movement with mathematics. Opinions are divided over the relevance or the accuracy of his analysis. So be that as it may, how do we make the most of Gann’s theories to help us with controlling our emotions?

By considering the Gann principle (whether we believe his work was accurate or not), where geometrical mathematics and vibrations move the market, we can start to understand that pullbacks, reversals or movement in the market are natural and those movements are non-linear.  The market does not and cannot move in a straight line. Humans move the market, entering and exiting trades many times in one day, with over three trillion dollars traded daily – a phenomenal feat, unheard of in Gann’s time.

Therefore it’s necessary to recognize that we can always expect price to move around, not descending or ascending in a straight line but in an ordered chaotic method and once we make sense of that, we can then cope with the fact that retracements will always occur.  It’s up to us to ignore the fear of missing out, the fear of losing our hard-won pips, the fear of being wrong and it’s up to us to keep our losses within our budget and make the most of our profits.

We need to have a little faith in ourselves, a little faith in our harmonic method, a little faith in our trading plan and a whole lot of patience.