🚨 I’ll be live at 10 a.m. ET with Graham Lindman🚨
Grab a coffee and join Dave at 9:50AM ET for the beginner preshow. It’ll make the 10AM Opening Playbook way easier to follow. See you in there [tap to join us for Opening Playbook]
You know what’s wild?
Most traders don’t lose because they pick bad stocks or have terrible strategies. They lose because they can’t stick with the plan when it gets uncomfortable.
I’ve been thinking about this a lot lately, especially as I watch people jump ship the second things get choppy. I get it — drawdowns suck, and nobody likes seeing red in their account.
But here’s the thing: I run an 80-20 portfolio split — about 80% long-only strategies and 20% non-directional trades. That means when the market drops, I’m going to take losses and mirror the S&P 500 (SPY) to some degree.
Now, hopefully I do a little better than SPY. Otherwise, what’s the point of all this work, all these commissions and all the effort? But the reality is, I accept that I’m going to track the market somewhat.
I’m fine with that trade-off — as long as I’m willing to take the drawdowns when they happen and outperform when the market is up. That’s the deal.
You either accept some risk and volatility in exchange for upside, or you lock down risk and accept muted returns.
The Psychology Problem
But that’s where it falls apart for most people.
It’s easy to say you’ll stick with a strategy through thick and thin. It’s a lot harder to actually do it when your account is down 8% and you start questioning everything.
Most retail traders bail out at the lows. They exit during drawdowns and jump from strategy to strategy, always leaving at the worst possible time. When you compound that behavior over time, the results get ugly.
I’ve seen it a thousand times. Someone has a solid approach, hits a rough patch, panics, switches to something else — and then that new strategy hits a rough patch. Rinse and repeat.
It’s not the strategy that’s broken. It’s the execution.
And when the market is in a grinding, high-volatility phase where it takes a long time to make directional shifts, it gets even harder than a normal transition. That’s when psychology really gets tested.
Know Your Trade-Offs
So here’s what I tell people: If you can’t take a hit and stay in the game, either be a long-term investor or be a super conservative, always-hedged trader.
Both approaches have their place, but they require completely different expectations and levels of psychological resilience. If you go that route, you can’t complain when the energy sector or Silver (SLV) is ripping on institutional flow and you’re only up 2%.
That’s the trade-off.
You wanted to control risk at the highest level and be net neutral? Great. But don’t get upset when you miss the big moves.
These are the fundamental trade-offs available to you as an active trader. You either accept some risk and volatility in exchange for upside, or you lock down risk and accept muted returns.
There’s no perfect answer, but there is an honest one.
When the market drags through heavy, indecisive phases, that honesty matters even more. It’s one thing to sit through a quick pullback, but it’s another to sit through weeks of chop while your strategy grinds.
That’s the moment most people break — not because the system failed, but because the uncertainty wore them down.
So before you jump into the next shiny strategy or bail on the one you’ve been running, ask yourself: Are you switching because the strategy is broken, or because you’re uncomfortable?
Because if it’s the latter, no strategy in the world is going to save you.
Now don’t forget to join us at 10 a.m. ET weekdays for Opening Playbook, and at 3:30 p.m. ET Closing Playbook!
Nate Tucci
Tucci Trades
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