There is no such thing as a trader or investor who wins all the time.
All the famous investors or traders you know have lost many times in their careers. Did you know that the famous hedge fund manager Ray Dalio lost everything in his 30s? He went broke. He had to start from scratch.
Before we begin, let us state the obvious:
Be wary of people who claim they don't lose.
Avoid people who flaunt indicators of winning or success that are simply not possible.
Losing trades happen to everyone! You are not alone.
Now let's talk about 5 tips for managing them:
Number 1: A losing deal is different from a failing deal
Experienced traders are well aware of their risk even before they make a trade.
Each losing trade is a small component of a larger process relating to a system, plan or strategy that has been thoroughly tested and studied.
A losing trade is a calculated event for experienced traders. They have determined their risk, position size, stop loss and target profit.
A bad deal is a different matter. A bad deal implies that someone risked their hard-earned money without any plan or process.
A bad trade is a reckless and unscrupulous trade. It often happens to new investors or traders who don't yet realize how much time, study, and research goes into making a solid plan. Be sure to remember the difference between a calculated losing trade and an unsuccessful trade without a plan or process.
Number 2: Every losing trade provides data for improvement
As we have mentioned several times, losing trades happen to everyone. But remember that losing trades are also filled with useful information and data. You can learn a lot from analyzing losing trades.
At the end of each trading day, week or month, experienced traders will analyze in detail their losing trades.
What patterns emerge?
What do they have in common?
Why did this happen?
With this information, the trader or investor can adjust their strategy based on what they have discovered.
Number 3: Don't let losing trades affect your health Your mental and physical health is just as important as your financial health.
Don't let losing trades affect any of them. If your system fails or a few losing trades begin to affect your emotions, step away from your computer or phone. Turn everything off and walk away. The markets have been open for hundreds of years and aren't going anywhere. When you're ready to come back, they'll be there. Get up, get some fresh air, and come back to the arena when you're ready.
Number 4: Share your experience with others
Traders and investors around the world want to learn from your stories and losing trades. It's an invaluable experience that we all share. Social media allows you to chat, share information and meet people who are going through similar experiences.
We can all learn from each other. Of course, the temptation to share our victories or act like the best trader that ever existed is great, but obviously we learn together and become better traders when we share the lessons of losses. This is where the deepest insights can be found, and together we can grow as a community of traders who are trying to outperform the market.
Number 5: Keep going
Markets are a game of learning, re-learning, and moving forward. New themes, trends and stories come and go every day. The journey is long, and it never ends. When implementing your trading or investment plan, it is important to do so with a long-term perspective.
One or two losing trades in one day or week is a small part of what awaits you in many months and years.
