the mistake 99% of traders make is thinking about money at all. money and P&L is an incredibly emotional subject. the objective in trading is to remain unemotional as only then can one make rational decisions. I spent many years in both the chicago pits and on the screen and there was a single ability that the handful of guys that were truly great possessed and that was the ability to take a loser and be unaffected emotionally. I can't tell you how many guys I knew including established traders that would have a loser and for whatever reason (money, ego) be unable emotionally to cut it loose. when that happens not only is one turning a manageable loser into a P&L disaster/potential blowup but also missing out on the opportunity of the next trade. mastering the skill of being unemotional took my trading to a completely different level. I'll leave you with this thought - THE BEST TRADES I HAVE EVER MADE AS A TRADER WERE LOSERS.
That statement is illogical. Although I get where you are coming from as if a losing trade teaches a life lesson. Let's not have too many of them though, yes?
it's not about learning some sort of life lesson it's about survival and developing the proper mentality to become a successful trader. any idiot can cash in a winning trade but it takes a real trader to own a loser and move on before getting crippled.
This is a vital skill. The ability to kill a trade at a moment's notice, without your mind racing in a million directions. The moment that trade crosses a certain boundary...kill it. Don't sit there and begin praying to God it will reverse in your favor. Prior to this setup and approach...it helps greatly to establish a fair set of assumptions and expectations on how you think the future graph will look like. Know how the rabbit will move. Don't chase it blindly from behind.
almost always a market will give a brief opportunity to take a loss before everyone else realizes what's happening and things get ugly. are you capable of taking that opportunity without hesitation? that is the difference between the greats and the wannabes.
there was a saying on the floor "you're either the first rat off the ship or the last." there is no middle ground. being the first rat off is a lot harder than it sounds.
what I am trying to say is don't think of it as a bad outcome. as soon as a trader starts thinking "bad outcome" the negative connotations of that statement carry baggage and make unemotionally pitching a trade that much more difficult. the way I looked at it is if I rationally took a manageable loss that was otherwise 30 seconds away from being a disaster and reversed to capitalize on the move then I was doing exactly what I was supposed to be doing as a professional trader. there is nothing more important in trading then managing one's emotions.
What do you think of it as? You took a trade and preserved your capital by taking a loss then moved on to the next trade. You followed your plan yet you lost the amount you had planned on. I try not to think of the money. I measure my performance by whether I followed my plan. Each trade has an outcome. Some good some not so good. I attempt to make only good trades regardless of the outcome.