Loosing from the initial capital vs. loosing from made profits?

Discussion in 'Psychology' started by Hun, Jun 23, 2003.

  1. Hun


    Hi Everybody!
    I'm interested are there any psychological differences between loosing from your initial trading capital (capital you start with) and loosing from the profits you made?
    How you individually feel taking a loss and also during loosing times? Would it be easier to loose from the profits?

    I understand that the profit you make becomes your money, but still it was other people’s money, not your hard earned cash (please don't say, you should risk only money you can afford to loose, I know that). And I also know that the losses are part of the game.

    Regards, Hun
  2. dbphoenix


  3. jessie


    Personally, I don't distinguish, although I know others do. I try and look at every position at all times as though I was just about to put it on. If I wouldn't open it right now, at whatever the current price is, then I should be out of it regardless of profit or loss. As I said, I know others do it differently, but that's one way to look at it.
  4. LOL! FUNNY! And all you hear on this board is all these young traders who want to quit school and trade. Maybe they should learn to spell first.

  5. "losing from the profits you made..." do you mean paper gain? or gains made the previous trades?
    It doesn't matter anyways, because real profits AND paper profits ARE your hard earned cash. You worked hard to identify and wait for your entry, and work harder to manage the open position. You worked for that profit, even if it's still 'paper' (of course, when some conditions are met, you may have 'free money' to play with).
    I don't look at it as losing from my profit or from my capital. I only look at the profit/loss at the end of each week/month/quarter/year.

    Think of it as a .... restaurant. You put up 300K$ to buy a restaurant, you now have to work hard to make it profitable. You don't even remember your 300K$, all you know is you have a restaurant, a business. At the end of the month, you have to calculate to see if your joint is making money or not.

    Cheers!! :)
  6. Hun



    I meant gains from previous trades. Let’s say you open an account with $10,000 and start to lose from that vs. later on when you’re successful and lose from $12,000 ($2,000 profit). Will it be different? The “fear factor” I mean.

    To: misctrader

    I apologies I poked your eyes out with my miss spellings. Sorry about that! I’m not a young out of school trader. English is my third language. I know that is not an excuse.
    You mast be an English teacher not a trader, that you picked up on my miss spellings and not answered my question.

  7. hun,

    And NO, I'm not an English teacher. I trade for a living. OK. Apologies if English is your 3rd language, because a lot of newbies come on here and English is their FIRST language though they write as well it could be their 4th language. hehe.

    Well, as for your question, why does it MATTER what others think?

    What matter is HOW you think about losses from initial capital vs drawdowns after gains?

    For me a loss is a loss. Loss from initial capital happens early on trading. Loss from capital gains happen later. They are both bad. One should try to minimize them both within a trading framework.

    anyhow, good luck!


  8. Atilla, you're killing me. Uhh....is it better to have my arm chopped off, or leg chopped off. C'mon look at your post, and you'll have the answer.
  9. Fear factor can come at any time, any time.

    It is all about confidence, and how the money was made.

    If someone is only lucky, they have no real confidence, and when things go south, they feel fear and lose confidence.

    Those who have made money consistently over time typically have a greater ability to handle the fear and not allow it to influence their trading decisions.

    When there is no fear, there is just plain stupidity when money is at risk.

    What matters most is not the presence or absence of fear, but the ability to trade in the face of it, and stay systematic, implementing what works.

    People who are only lucky in the beginning, lose their fear because it was easy, and often blow out later on.

    Fear is good, knowing that we could lose is always good, having it grip the mind is bad. Fear, if understood and handled properly can keep the mind sharp.

    Traders, good traders, brave the markets every single time they place a trade.

    I don't think fear is mastered, but rather the ability to deal with it most effectively is gained over the lifetime of a trader.

    Feel the fear, and do it anyway.
  10. Losing is losing, all money is fungible. Tharp has some formulas for people who have blocks in there head about risk capital. Maybe he can help you.
    I should probably yield to some of our more knowledgeable traders about losing. I trade spreads. Long ago, I EARNED back my tuition. I guess you could say now. I trade with the houses chips. It is never easy taking a large loss. Where your imaginary mind thinks money comes from has nothing to do with it. Money is capital. When it goes you lose all the profits it would have made. That is the loss. Not the chips that are already on the table. The money on the table has been already spent. We chose to risk it as compared to spending it. The real loss is the chips that we were setting up to play in the future.
    No, it is not OPM. It is my hard earned money. All profits belong to me. I can spend it, I can lose it, and I can give it away. I put it at risk 24x7 and deserve the return. If you think the only way to make money is with physical labor then I hope you get a new shovel for Christmas.
    [​IMG]The profits we make are freely exchangeable for & replaceable by any other of similar nature or kind in the satisfaction of an obligation. I turn it into spend able cash all of the time. I. E. that means we can buy anything we want with it, at anytime, and spend it on anyone we want to at anytime. What we lose is the ability to do that. That is our loss. What we have to do to make the money is subordinate to what we intend to do with it. What we earn is in no way of lessor value that what anybody else earns.
    #10     Jun 24, 2003