Everyone hates them. Everyone knows they’re gonna happen. They hurt, they burn, they bruise – both your feelings and your account.
Yep, the dreaded losses.
But whilst a loss is generally a bad thing, different traders react to a loss differently. And THAT’S the most important thing. As Toni mentions:
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“Most of us, consciously or subconsciously, hold memories of trades gone bad. These memories or negative associations can color our perspective of the markets and limit us from making good trades. When we deal with these memories in a constructive manner, we can send them packing. Left to simmer, however, they continue to sabotage our trading decisions.”
Ok, so you’ve just made a string of losses. Not particularly great, but generally inevitable nonetheless. Now, a number of things can happen. Either your faith in your method/system begins to wane, and you try to refine what you’re using some more, or you accept the losses as part of trading, or you don’t accept the losses a single bit – meaning, you try to take revenge. Taking revenge on the market – that is the worst thing you can do, it really gets you nowhere, and leaves you in an even bigger hole.
Toni continues,”Now, if we’re honest, most of us will admit that at one time or another, we’ve ignored our risk parameters. We’ve held stubbornly onto a losing trade, and then clung to it while it sunk to gloomier and gloomier price depths. Trouble is, when that happens, we don’t merely lose money. The experience almost always results in feelings of guilt and remorse that stay glued in our subconscious long after the position is closed. If these feelings aren’t dealt with and remedied, they cloud our perspective. Moneymaking opportunities can step into our path, but we may not recognize them because of the film of remorse and shame that stains our perspective.”
To read the entire article from Trading Views (it’s an excellent one), just click on the link below: