There is no trader in the world that does not have losing trades- we have no control over the market, but we do and should have control over ourselves.
There is no successful trader in the world that does not have losing trades. There is no winning strategy in the world that does not take losing trades. These are truths that no one can argue with. Losing trades are a part of trading and that will never change. It is how we view them and use them that can make all of the difference to our whole trading experience.
Without the correct belief system in place you may come to doubt yourself and not take the next trade that presents itself
The aim of this article is to show you how to view losing trades in the correct way. It is my hope that this knowledge once internalized will change your whole trading experience to a much more relaxed one with fewer mistakes.
I am assuming in this article that you already have a trading plan and strategy in place which put the odds in your favor. The reason I am making this assumption is because if you do not have a strategy with a positive expectancy then having a losing trade does have meaning- it means you do not know what you are doing. Having a string of losing trades will just confirm that you do not know how to trade.
On the other hand, if you are trading a strategy that has a positive expectancy that you have tested and has proven itself over time, taking a losing trade has no meaning whatsoever.
How would you feel starting a new month with 6 losing trades in a row?
I will illustrate this with a number of examples based on flipping a coin. Say we have $10,000 and we flip a coin 20 times. If it lands on heads we lose $100 and if it lands on tails we gain $200. This strategy has a positive expectancy which will make you on average $50 every time you flip the coin [(200-100)/2 = 50]. It does not mean that you will not have losing periods. In fact you do not know how the results will be distributed as all. It is completely random. When training new traders I get each one to do this experiment and write down after every flip what they are thinking and feeling. This gives us some insight into how we view losing even when we know that the odds are in our favor and that we will come out on top in the end.
Please take a look at Table 1 below which shows 3 results of flipping a coin 20 times.
It is interesting to note that on result 1 we actually profited what we expected – 50 x 20 = $1000. Result 2 we only profited $100 and on result 3 we profited $1900. Over the 60 coin flips we actually profited $3000 which is in line with our expectations – 50 x 60 = $3000.
Now imagine you started your month trading with result 2. How would you feel starting a new month with 6 losing trades in a row? What most aspiring traders do is throw their hands up in the air and say that the strategy does not work and continue their search for the perfect strategy – which does not exist. For those aspiring traders it is a constant emotional roller coaster ride.
The correct response to a string of losing trades (when you are following a strategy that has been proven to have a positive expectancy over time) is to just continue trading your edge and over a large enough number of trades the odds will play themselves out in your favor. The only way to be able to do this without too much emotional stress is to internalize the concept that the result of any one trade or even a string of trades is meaningless. What counts is how you perform over the long run.
Over the 60 coin flips we actually profited $3000 which is in line with our expectations
Without the correct belief system in place you may come to doubt yourself and not take the next trade that presents itself and that was the trade that ended up being a big winner – which causes you more emotional pain.
Some trading months can be like result 1 – the average winning month, some can be small winning months like result 2 and some can end up being home run months like results 3 and some may end up being losing months. The point to remember is that we do not know how the results are going to be distributed. We have no control over the market but we do and should have control over ourselves.
There is no successful trader in the world that does not have losing trades. There is no winning strategy in the world that does not take losing trades. These are truths that no one can argue with. Losing trades are a part of trading and that will never change. It is how we view them and use them that can make all of the difference to our whole trading experience.
Without the correct belief system in place you may come to doubt yourself and not take the next trade that presents itself
The aim of this article is to show you how to view losing trades in the correct way. It is my hope that this knowledge once internalized will change your whole trading experience to a much more relaxed one with fewer mistakes.
I am assuming in this article that you already have a trading plan and strategy in place which put the odds in your favor. The reason I am making this assumption is because if you do not have a strategy with a positive expectancy then having a losing trade does have meaning- it means you do not know what you are doing. Having a string of losing trades will just confirm that you do not know how to trade.
On the other hand, if you are trading a strategy that has a positive expectancy that you have tested and has proven itself over time, taking a losing trade has no meaning whatsoever.
How would you feel starting a new month with 6 losing trades in a row?
I will illustrate this with a number of examples based on flipping a coin. Say we have $10,000 and we flip a coin 20 times. If it lands on heads we lose $100 and if it lands on tails we gain $200. This strategy has a positive expectancy which will make you on average $50 every time you flip the coin [(200-100)/2 = 50]. It does not mean that you will not have losing periods. In fact you do not know how the results will be distributed as all. It is completely random. When training new traders I get each one to do this experiment and write down after every flip what they are thinking and feeling. This gives us some insight into how we view losing even when we know that the odds are in our favor and that we will come out on top in the end.
Please take a look at Table 1 below which shows 3 results of flipping a coin 20 times.
It is interesting to note that on result 1 we actually profited what we expected – 50 x 20 = $1000. Result 2 we only profited $100 and on result 3 we profited $1900. Over the 60 coin flips we actually profited $3000 which is in line with our expectations – 50 x 60 = $3000.
Now imagine you started your month trading with result 2. How would you feel starting a new month with 6 losing trades in a row? What most aspiring traders do is throw their hands up in the air and say that the strategy does not work and continue their search for the perfect strategy – which does not exist. For those aspiring traders it is a constant emotional roller coaster ride.
The correct response to a string of losing trades (when you are following a strategy that has been proven to have a positive expectancy over time) is to just continue trading your edge and over a large enough number of trades the odds will play themselves out in your favor. The only way to be able to do this without too much emotional stress is to internalize the concept that the result of any one trade or even a string of trades is meaningless. What counts is how you perform over the long run.
Over the 60 coin flips we actually profited $3000 which is in line with our expectations
Without the correct belief system in place you may come to doubt yourself and not take the next trade that presents itself and that was the trade that ended up being a big winner – which causes you more emotional pain.
Some trading months can be like result 1 – the average winning month, some can be small winning months like result 2 and some can end up being home run months like results 3 and some may end up being losing months. The point to remember is that we do not know how the results are going to be distributed. We have no control over the market but we do and should have control over ourselves.
Webull Introduces "Lite" Version of Trading App for Retail Users
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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