Are Past Losses Keeping You From Being A Winner?

Discussion in 'Psychology' started by zmostatabi, Nov 16, 2005.

  1. Are Past Losses Keeping You From Being A Winner?

    Trading losses are no fun. In fact, they hurt when we react emotionally which most of us do. If you have traded at all, you undoubtedly know exactly what I am talking about. You have suffered a loss, possibly a big loss, possibly a string of losses. You may have been in a losing position that keeps deteriorating with no plan to exit. The feelings we have when these situations occur are normal, but are also counterproductive to achieving our goal of potentially making money.

    Here are some typical reactions to past losses.

    1. Take revenge. You look upon the market as being against you and you react by making irrational trades and lose even more.

    2. Blame the market or anything or anyone but you and repeat the same errors of the past on future trades.

    3. Stop trading altogether, concluding that it's not possible to make money trading the markets.

    These typical of reactions all have one thing in common; they will prevent you from ever becoming a potential winner.

    This is how professionals tend to react to losses:

    1. They do not beat themselves up emotionally. They understand that losses come with the territory and are to be expected (there is no holy grail).

    2. They take full responsibility for their losses and do not blame others. They objectively review the losing trade to see if there is anything to learn, if corrections in their approach to trading are required or if the loss was just a normal loss within the parameters of their trading methodology.

    3. They take losses in stride, because they know that the system they are trading potentially gives them a winning edge and with proper money management will potentially make them a net winner.

    The pros can do this, because they have a plan, they have a potential winning edge trading system, they trade it with discipline, and they use sound money management principles.

    Don't let your losses keep you from being a winner. Think and act like a pro.

    Good Trading,
  2. I agree 100%. I used to get very upset by my losses, but now I can usually understand that it's just part of the game and I have to accept it. Just cut the losses short and remember that there is always tomorrow.
  3. And don't try and get that loss back with one trade. Make smaller trades and take small gains.
  4. Cheese


    Or are some past winnings keeping you from realizing you are a loser?
  5. I fall into the "big past loss" category and it's kept me sidelined for a whole year now. I'm on the verge of starting over now, with a plan and lots of practice but it's still scary and I'm constantly procrastinating when I re-start.

    I've met some guys with the opposite problem. They had a string of early wins and thought this game was easy and became reckless.
  6. I have been poking around the "trading game" since 1986.
    I had the good fortune to "experiment" with OPM (other people's money) as a broker of stocks and futures. After losing some of my own I realized that the only remedy is to take a brake from trading after a big loss and look at strategy and yourself real hard.
    I hope this information is helpful....
  7. I wish I had read your post on 1/3/2001 and just taken a break.

    That was the day I was short 5000QQQs and 2000 ARBA for some quick lunchtime scalping (I was usually in and out of trades within 1-2 minutes) when the Fed decides to do one of its fancy intrameeting 1/2 point rate cuts. My system froze up and I closed out for a $75,000 loss in just one half hour.

    For me, that was just the beginning of my troubles. As a relatively new trader, I spent the next 12 months trying to recoup that "unfair" loss by reckless revenge trading. By the end of the year, I was down over $200,000. It's taken years of wound-licking and emotion-free trading to recover.

    The key...walk away after a big loss in order to clear your head and quell your emotions. Never let a big loss snowball into an insurmountable one.

  8. This ET thread My Options Play by Multioption is an example of WHAT NOT TO DO. It shows the power Psychology has over you.

    Its 165 pages, mostly filler, but check out the posts by Multioption from start to finish.