Let’s face it, trading losses can be tough. Nobody likes to lose money. As all traders will learn sooner or later, trading losses are a routine part of the game. However, many traders find it difficult to accept unavoidable trading losses.
When we can’t take a loss
It is the ability to accept the occasional trading loss that can be a key factor in whether or not you become a profitable trader. I’m not saying losing trades are encouraged; But the way you handle losses can significantly affect your degree of trading success.
Refusing to tolerate and properly handle trades that don’t work leads directly to trading mistakes. It is the inability to cope with the inevitable loss of the trade that causes traders to interrupt winning trades, stop in the middle of a trade, hang on to losing trades, average down and not pull the trigger on trades. solid trading setups.
Learning to accept and deal with trading losses can be just as important as making good trades.
survival tips
Here are seven steps you can take to survive and even thrive when you suffer a loss:
- Record the operation as it occurred: Don’t sweep the loss under the rug! You need to learn from the loss (that’s its value), so write it down. Include how you saw the market at the time and how the market action and your indicators seemed to meet the criteria for a strong trade setup.
- Evaluate trade: Once the trading day is over, go back to what you wrote and see what can be learned. Did you miss reading the market? Was there something you didn’t check? Did you accept the exchange even though it did not meet your exchange criteria? However, was the trade configuration valid? just didn’t work?
- Use the loss as a learning opportunity: Ask yourself, “What can I learn from this trade?” Is there any insight on the market action that can be obtained? Is there something in your trading behavior that needs to be addressed? Whatever it is, you have the opportunity to capture something new, and that is valuable!
- Take immediate corrective action: Do you need to modify your trading setup? Is a rule needed for personal discipline? Regardless of what you have learned, take immediate action.
- Keep the right head and attitude: You always have a choice about attitude. You can either accept losing as an inevitable part of trading and be thankful that you can learn from it, or you can go into a negative downward spiral of feeling bad, getting discouraged, and feeling even more miserable. Follow the constructive steps outlined here and stay on top of it all.
- Remember, trading is based on probabilities: Each trade setup has a chance to win and a chance to lose. In a large number of trades, an advantage setup will be profitable. Any given trade is always uncertain. This is the law of trading probability.
- Address others: We all need support. Talk to your business partner, mentor, partner or spouse. It helps to unload a bit and you can get a different perspective.