Losing

How good a loser you are is one of the biggest factors that will determine your fate as a trader. Not how good you are at reading charts or predicting the markets.

I believe that the normal person doesn’t like to lose and can’t handle being wrong multiple times in a row. It affects them psychologically and brings all sorts of emotion baggage out front. Really ugly, deep-seated stuff.

Taking trading loses is an everyday occurrence and the smart trader prepares to take a loss on EVERY trade before they enter. This is called accepting the risk. When you truly accept the risk of losing both financially and emotionally then you can insulate yourself against negative thoughts such as “what was I thinking?”, “I don’t know what I’m doing”or “ those f**kers did it to me again!”. Thoughts like that will paralyze you and make you not take the next trade. (That will inevitably be a winner by the way, leading you to beat yourself even more)

 Far from approaching this in a negative way as it may appear on the surface, it is actually a positive because it allows you to view losses as just part of the game. You’ll have winners and you’ll have losers. You don’t take them personally or a reflection of bad judgment and can move losers to the “learn from” column. 

Maybe you are just tallying up the financial cost of a losing trade and not acknowledging the emotional cost. I think that they are intertwined so that if you do one you must do the other or it will make its presence felt.

Tell yourself that it is OK to take losses.

It’s OK to take losses throughout the day.

It’s OK to take losses several times in a row.

Believe it in such a way as to ingrain it into your trading plan so that is the first item in your checklist as you consider putting on a trade. Where will I exit this trade when my decision is proven wrong.

You want to achieve a mental state that will allow you to execute your trading plan without hesitation whether you are trading your 5^th winner or 5^th loser in a row.

Let it become an integral part of your trading plan so that you cannot be any other way.

When you stick it right out front then you’ll never suffer the big blow up or nagging self-doubt that you’re not worthy of being successful in the markets.

All this ties into the mental preparation that success traders do. Total belief in your system and yourself. Total confidence that you can make the correct steps whether it’s in a winning or losing trade.

Start now by spending more time working on your mental preparation instead of trying to predict charts and convince yourself what the markets are likely to do. Use those hours wisely and focus on the core beliefs of you trading plan so that you can take advantage of what the markets will deliver tomorrow.