Another good read over at Centre Court Trading's blog:
I often hear about traders taking a break for a few weeks after a bad spell. As far as I'm concerned, that's just running away from the problem. These traders mistakenly believe that when they return, they will magically have eradicated whatever the issue was that caused them to have such severe losses in the first place. Whilst a short break can be excellent for re-charging the batteries, settling the mind and rejuvenating confidence, unless you were away actually swotting up about trading, a long break isn't going to fix anything. I know I keep re-iterating this a lot but the only way to improve at trading is to keep working hard - and if that's not helping, then you need to work even harder! Too many people think trading will come easy to them and are not willing to go the extra mile, especially if it means doing anything that might intrude on their social life or seem too much like having a second job. But only by putting the hours in will anyone improve at anything.Personally, after a bad loss, the last thing that is going to rejuvenate my confidence is taking a short break. I agree that it is often a good idea to take a very short break until the danger of chasing / tilting has passed, but a break of a few weeks makes no sense. I'm much happier taking a break after finishing on a positive note than I am after a bad loss.
For me, a bad loss stays with me until I have a decent win. The win doesn't necessarily need to erase the loss in financial terms, but it's the step to recovery that frees up the mind, and the importance of a free mind when making betting decisions can't be overstated. While a mind still pondering a bad loss is a bad thing, it can be just as dangerous for the mind to be over-confident. Both states of mind will lead to poor decisions, the former most likely leading to closing profitable trades out too early (the thought being "I can't risk another big loss") while the latter can lead to recklessness ("I am untouchable - I can't do a thing wrong - this will turn around").
As The Sultan says, the belief that returning from a break will have somehow magically fixed the problem is unrealistic. It reminds me of the people who believe that a new year or new season or big tournament is going to make a difference to their results. If you keep doing the same thing, you will keep getting the same results. If you keep taking losses, you need to adjust your methods. Keep records so that you can see where your losses occur, and make changes.