How to Overcome Big Trading Losses July 22, 2015 21:10

     Every trader has been there. You're finally starting to feel confident in what you've learned in your trading career and are ready to make another trade. You do the proper scanning, find a stock that matches your strategy, set your buy points, profit target, stop loss, and prepare to enter the trade. Everything seems to be setting up perfectly. You enter the trade, things go good for a bit, then one day you wake up and your position is down 35%, leaving you to wonder what you did wrong. Now, this may not be the exact story you went through, but the message is the same. We all have losses, some bigger than others. How we handle those losses will define us as traders.

     My early trading career was filled with a series of amazing wins, and devastating losses. One day I'd make a trade and lock in a nice 30% profit, the next day I'd lose 50%. As many of you know, I fell prey to the typical pump and dump scams many of you took part in as well before becoming one of my students (we address these scams in our trading course for this exact reason). As I actually began to learn and understand the art of trading, those devastating losses started to disappear. I knew why I was making trades, I had stop losses, and a complete plan for each trade I entered. Yet still, there was the occasional big loss that could send anyone into traders depression (that moment when you question why you ever started trading in the first place). So, for that, I've compiled 5 simple things to do to get your mind off the loss, and back in the game!

1) Make Sure You Actually Have a Plan

This first point may not actually make you feel better, but it is necessary. Did you make the trade fully understanding why, or did you blindly make the trade or buy it just because someone told you to? If you can get to the root of the problem, you can begin to fix the mistake and feel confident in the knowledge that you are working to correct it.

2) Call it Quits for the Day, or Even Week

Sometimes taking time away from trading can re-motivate you. You could be doing everything right, yet still be losing. It's at times like that, that I simply shut it down for the day. Go on a walk. Go catch a movie. Go workout. Do something to take your mind off things. And, when you feel ready, ease back into it.

3) Look Back On Your First Winning Trade

Look back to your first winning trade. Remember how it felt and how happy you were to be trading? Now, also look back at your first win after your first losing trade. Realize that you can get back on the horse, because you already have! If this trade is your first loss, I've got good news for you! Your next win is right around the corner! 

4) Understand That Even the Best Traders Lose

No trader is immune to losing. Even though I've been able to achieve a 75% to 80% winning percentage, I've had my fair share of major losses. Even the best traders out there lose. Understand it is part of the game. Don't beat yourself up over a failed trade, especially if you had a clear plan in place!

5) Get Back to the Basics

The best thing you can do after a major loss, is really get back to the basics of trading. Take some time off and re-do our  trading course. Re-Visit our Elite Members video library and watch all the videos again, taking notes or adding to what you already have. Don't change your entire trading strategy. Instead, get back to the basics of what your strategy is and why it is effective!

Trading is mental warfare. When you're losing, it can feel like the entire world is coming down on you. Pick yourself up, and re-assure yourself that you can do this! When you handle your trading losses like a true pro, you can rest assured you'll be in this game for the long haul.