Most of us traders have been there, incurred so many losses, so many times that we’re actually unsure of whether or not we should continue trading. Well we’re here to tell you there’s nothing you morally did wrong (unless, of course you cheated to get on top) you might have made some common trading errors that a lot of beginners tend to make.
We’re here to help you get back up when trade financially and emotionally hits you hard in the stomach and reminding you that you can’t let one streak of losses ruin all your chances of succeeding in the future.
Understand What You Did WrongThis step is extremely very important because before you can get back up and think, “Okay, I got it this time,” you need to know what you did wrong to fail the first time around, if you don’t do this you’re just in for even more losses. There are basically two types of losses that a trader can go through;
A statistical/normal loss:
A statistical loss is one which is incurred mainly due to some sort of overvalue or undervaluation that might have effected your trade strategy, this type of loss can also be called a normal loss because it is normal for a trader to often at times lose. The fact of the matter is that there will be losers in a trade as well as winners, statistically speaking, even if you employ the most winning trading strategies, a certain percent of you will definitely be losers.
Emotional loss
Emotional loss is pretty self explanatory, all traders are humans, and human beings sometimes do let their feelings and emotions get in the way of their work. Emotional loss also refers to losses made when you let your inner feelings such as desire for revenge, greed or over confidence get in the way of you and your real trading objectives. You can even feel pressurized- especially if you’re a full time trader to gain as much profit as you can and this can lead to losses if you’re not able to handle the pressure properly.
2. Understand That Everything Takes TimeTime is everything when it comes to trade, if you come up with a good strategy; do make sure that you give it enough time before you start doubting it and coming up with new ones. Your trading edge needs at least a couple of tries for it to prove its effectiveness, don’t get demoralized just because it doesn’t work the first time around because the odds will not always be in your favor and that is something you will need to deal with as a trader.
3. Drill This Into Your Head: Beating Yourself up for Losses is Only Going to Keep you From Making Future ProfitsYou can either use your emotions to your advantage or you can let your emotions control you, the art of taking all the negative energy inside of you and turning it into positive energy and letting it help make you more determined and focused is a hard task but nonetheless, it’s a task that needs to be done if you hope to make any sort of progress as a trader and as a human being. You’re only damaging your mindset if you keep beating yourself up over losses, taking a negative, unmotivated mindset with you when you enter a trade is trading suicide.
4. Take Some Time OffWe all need vacations- even the people who lounge around on beaches for a living need vacations- especially after you’ve been through something like a streak of losses as a trader. Sometimes the best thing for you to do is to walk away and take a break temporarily, till you have your head clear and you are mentally stable enough to go back into the market and not let your emotions get the best of you and lead you to overtrade or make unwise decisions that you might regret later. A vacation might also be the best place for you to come up with your future strategies and game plans, you’ll be able to reflect on where you might have gone wrong and what you should have done better and use this to your advantage whenever you’re ready to trade again.
Hope this has been helpful to you! Have you ever had a streak of losses? How were you able to get over it? Let us know!
