Losing trades happen. They are apart of the journey. There is simply 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 career. It is perfectly normal. Did you know the famed hedge fund manager Ray Dalio lost everything in his 30s? He went broke. He had to start over from scratch.
This post will address what losing trades really mean and how to deal with it.
Before we begin, let us state the obvious:
- Be careful of people who claim they don't lose. - Avoid people who flaunt win rates or success rates that are simply not possible. - Losing trades happen to everyone! You are not alone.
Now, let's talk about what bad trades mean and 5 tips for managing them:
Number 1: A losing trade is different from a bad trade
The most experienced traders are well aware of their risk before they ever place a trade. Each losing trade is a small component of a bigger process that relates to a system, plan or strategy that has been thoroughly tested and studied. A losing trade is a calculated event for experienced traders. They defined their risk, position size, stop loss, and profit target. 🎯
A bad trade is very different. A bad trade implies someone risked their hard earned money with no plan or process. A bad trade is reckless and indiscriminate trading. This often happens to new investors or traders who do not yet understand the time, studying, and research that goes into making a rock solid plan. Be sure to remember the difference between a calculated losing trade and a bad trade with no plan or process.
TradingView Tip: there are several ways to get started with a plan, system or process. Paper trading, backtesting and/or working with proficient traders who give valuable feedback are all ways to get started. Don't risk your money without first doing research.
Number 2: Every losing trade provides data to get better
As we've mentioned several times now, losing trades happen to everyone. But remember, losing trades are also filled with insightful 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 their losing trades in detail. What patterns are appearing? What do they share in common? Why did they happen? With this information, a trader or investor can adjust their strategy based on what they've uncovered.
Number 3: Do not let losing trades impact your health
Your mental and physical health are just as important as your financial health. Do not let losing trades impact either of those.
If your system is breaking down or several losing trades are starting to impact your emotions, step away from the computer or phone. Turn everything off and walk away. The markets have been open for hundreds of years and are not going away. When you're ready to come back, they'll be there.
Get up, get some fresh air, and get back in the arena when you're ready.
Number 4: Share your experiences with others
Traders and investors across the globe want to learn from your stories and losing trades. These are invaluable experiences that we all share in common. Social networks allow you to chat, share, and meet people who are going through similar things. We can all learn from each other.
Sure, the temptation to share your winners or act like the best trader who ever existed is tempting 😜 - but it's clear we learn together and get better when we share lessons from the loses. This is where the deepest insights are found, and together, it's where we can grow as a community of traders all trying to outperform the market.
Share and ask for constructive feedback!
Number 5: Keep Going
Markets are a game of learning, relearning, and progressing forward. New themes, trends, and stories appear and disappear daily. The journey is long and it never stops. When implementing your trading plan or investing plan, it's important to do it with the long-term in mind. One or two losing trades in a single day or week is a small fraction of what's to come many months and years down the road. 🌎
Keep going. Keep building. Keep refining your plan. Study the data.
We hope you enjoyed this post!
We hope you learned something new or informative!
Please leave any comments below and our team will read them.
Amazing post again, great!! thanks for sharing such amazing educational material
th333g000d
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I stalked EBAY today and "just knew" that after that looooooooong sell off there was going to be a reversal.....DIDN'T HAPPEN....to the tune of -$408. i kept entering for a long reversal but (this happened to me twice before with XOM) only to get stopped out of my risk every time..... Lesson learned: wait on a clear reversal set up. I may miss 10-20 cents in the move but trying to "guess" where the reversal will take place is not the right thing to do.....missed money is better than lost money Donny Ridgeway
brainyDog88722
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Noob here. Trading is hard. I believe it takes a complete mental shift for many people before they become successful at it. You need to change your view of what it means to win or lose. For example, to get better at "not losing" is to look at losing like touching a hot stove. Losing must hurt.You don't want to lose ever again like you never would touch a hot stove. If you don't put a stop loss for every trade, then you haven't learned your lesson yet. If you don't do proper sizing of your trades, then you haven't learned your lesson yet. Losing has to hurt that it makes you do proper precautions when doing a trade. And for winning, you must change what it means to win a trade. It must mean that you you gained money not just you were right that a stock price went where you thought it was going. No moral victories. Being right doesn't count. Only thing that matters is that your account got bigger. Hope this helps.
FireStick100
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This is so ‘TRUE’. I have lost quite allot, but I ain’t giving up. Learning as I go. I somewhat differ from what other suggest about using demo. This is so, because the demo will temp you to us ‘BIG’ lit sizes, and that can be confusing. I rather to risk my funds, and grow through my ‘punches’. Nevertheless, respect to those who are successful after practicing in their demo. But, myriad have also given up, because they are scared to lose. No one wants to lose, but failing our way to success is ‘personal training camp’, and not many will have the patience. Thank you for this info Trading View.
rhotimi
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Yes, the post is very informative for me. I have traded every day Mondays through Fridays in the last 6 years and I agree in total with every point raised in this post. I trade full-time. Loss happens, it is part of the journey but when you lose, try to understand why and never repeat the mistake again to avoid another loss in the future. a losing trade just tells you never to do it the way you did it which leads to the loss again. Also when you win the trade, try to know why you win so that subsequently, you can repeat the process to enable you to win again. But, that doesn't even mean you'll not lose again in the future because even the gurus do lose trades too. Just ensure you make more profits that losses to keep you going. The longer you can stay in the forex market, the more money you can make. And don't forget to do away with greed. I use to say Greed is the husband of FEAR and their only child is Loss. Try to avoid them all. To your success.
tradertech6
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It is hard to accept a loss, even a relatively minor one. Many times I have averaged down (or up) and been able to get out of a "losing" trade, and get out break even, or perhaps with a little profit. But this is a very bad way to approach trading. Let's say you think you see a bottom, and go long. You're wrong, and it goes down $1000. Now, you could buy 2 contracts at $1000 down, and if it rallies $333, you're out break even. You've avoided a losing trade, yes. But you've given up opportunity, time and psychological capital. Had you taken a $200 stop-loss on the 1st contract, then you could have bought the 2 contracts at $1000 down, and if it rallies $333, you're up $666 - $200, for an overall win of $466 - with perhaps more to come if the reversal continues. This is a far better use of time and money, than increasing your risk with more contracts, just to get back to "break even". I've made this mistake too many times. I've had huge drawdowns, far in excess of whatever I ever planned to profit, by continuing to average in. Most of the time, yes, I do get back to "break even", or at least to an acceptable loss. But how much better I'd have been had I just taken the quick loss, and then looked for the next signal to enter with a new position, and actually make an overall profit. That's a much better way to trade. Always a work in progress, however.
kleinsmithfarrel
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@tradertech6, so true ive made the same mistake every time
I’ve been awaiting to take profits at the right price for a while now.
Positioned myself out of some alts to be safe, but I’m happy to overall hold at this point.
We cannot control this market, nor can we make it move.
I do not buy or sell unless price is satisfactory
Masterdj7
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This is my first email tip as I registered today itself. I' m impressed by this dedication of Trading View to its customers. Looking forward for more. Thank you !