To win or lose a trade is a familiar thing. We have experienced bot the joys and pains of it.
With trading losses, the majority of the time the shortfall comes from the trader and no the trading strategy.
Yes, that probably means you. But, today I’m going to talk about how to stop losing money and become a winning trader. Before you even place an order, deciding where to buy or sell is always connected to where you place your stop-loss order.
No discussion of position entry is complete without a thorough explanation of stops. But I’m left to wonder why so few investors use stop-losses. If you’re guilty of not using stops, you need this information. It might just mean the difference between retiring on time with a healthy nest egg or retiring later and still just “scraping by.”
When you have a plan for placing stops, your wins will out weigh you losses, and when the losses come you will come out on top because you will still be around to trade. The traders psychology of loss taking bears looking at here.
All professional traders understand they must know where they are getting out before they get in. They have to know ahead of time what a wrong trade looks like so they can exit it quickly. This is a rudimentary fundamental that EVERY professional trader knows the answer to.
Are you able to respond to these questions?
1.) What are the indicators for staying put, or getting out?
2.) When a stock is losing, do you have a guide that lets you know when to sell?
3.) Is there a set point for you to break-even by moving your stop?
If the answers to these questions elude you, you are not unique. What it says though, is that you need to get some regulations set for yourself, particularly when going to short stocks. But these trading rules won’t amount to a hill of beans if they aren’t used. If you aren’t using them you need discover why it is you don’t manage your risks in a professional and non passive style.
Many investors refuse to take a loss for two basic reasons:
1. Admit they are wrong? No Way!
Though not really avoidable, a loss is seen as a personal failure. This is a painful thing to admit for a large portion of traders, like it illustrates failure at life. It also takes away from their positive self image.
They personalize the loss and experience emotional pain. Many traders prefer to remain in denial instead of acknowledging their losses are causing them pain. This type of trader often has to lose it all before he begins to change (or gives up trading).
2. Taking that large of a hit would damage their portfolio greater than it can recover from.
Losses aren’t just on paper, they are real. The loss is what it is and the quoted price is it’s value.
Both of these examples are a form of self-delusion that millions of investors, both large and small, suffer from. Just look at AIG, Merrill Lynch, WAMU, Lehman, etc. … and you can take comfort in the fact that self-delusion is no respecter of income bracket or social standing.
Are you feeling uncomfortable with what I am saying?… or powerless, or angry? Good! That is a sign that you are capable of making the changes you need to.
The winning trader uses a different strategy from the losing trader by regarding the pain from the loss in an impersonal way. They use the loss as a sign that something went wrong with their approach, or their execution, but NOT that something is wrong with them.
Separating themselves from what they are doing is what a winning trader does. Either they know it or learn that the problem is either in their approach or their skills not in their worth as a human being. Changing the pain of a loss into a motivational factor that increases their quest to be a better trader.
Both are learned responses and within your control. The opportunity for growth from the pain of losses is the same. It’s what we do with the emotional pain of a loss that matters, not the loss itself.
Stick with my proven ETF Trend Trading system and make winning a habit. Study; ask questions and monitor your position size relative to your portfolio and you will end up on the winning side more often than not.
My constant reminders about proper stops and risks are one of the strongest parts of my one year mentorship program. Even after you understand my system 100%, it’s still good to hear me tell you, “Don’t move your stop” or “Be sure to take profits when the system says to, not too early and not too late.” Most my students like the mentorship part as much or even more than the course itself.
Learn how it’s very possible to make 6% per month in your investment accounts using etf trend trading! “Big A” is a recognized expert in the world of etf trend trading system & reveals trading & investment secrets that have been kept under wraps by hedge traders for years. Give him your email & get a free report & webinar today!
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