Trading Challenge Success: How To Turn Your Losses Around

Turn Your Losses Around
One of the things I find myself repeating endlessly is something that you all need to hear over and over again to keep you going, especially for my upcoming trading challenge students. EVERY trader…even the greatest…experiences loss and it’s SO important to learn from your losses! If you haven’t lost, you haven’t learned. The hardest part of trading is learning to deal and cope with the losses, learning from them, and turning those lessons into the foundation that can help you achieve major wins.
Download a PDF version of this post as PDF.
I’ve called my program for my most dedicated students The Millionaire Trading Challenge because it’s truly a ‘challenge.’ And a challenge is…well, challenging. This isn’t a walk in the park, 90% of traders lose so it’s my job to help people turn their losses around…and if you’re still having a tough time dealing with the losses that will eventually make you the trader you want to be, then maybe the story of one of my newer students, John Papa will restore you to your senses and keep you from throwing in the towel prematurely.
You learn to lose and manage your losses, you’re not failing. You only fail if you can’t accept losses and cut and run when it doesn’t all click right away.
Remember, I only win roughly 70% of the time, but still, I’ve turned thousands into millions, a point I try to hit home to my students on a weekly basis in my live trading webinars here.**
John recently wrote to talk about his struggles during his first six months of trading. During that time, he kept thinking “I’ve finally got this,” but then he would get hit with a big loss and watch his account plummet:
“I lost a bit under $16k after 6 and a half months of trading and was left with just $8000 in my account. Then it finally all clicked together. I’m on a tear in the last 5 weeks. I have had only 3 losing trading days since November 15th (27 total trading days, 24 green), with the worst total loss for a day being $272. In total, I’ve made back $11,179 since November 15th. That’s 140% account growth from my low point and $4,472 away from being breakeven overall. Today was actually my best day ever, with $3,020 profit between two trades. I narrowed down my focus to strictly playing multi-day breakouts and it is working so well. My stats over this time period are exactly where I want them to be, with a 71% win percentage and an average gain of 11%.” (Sykes note: by the time I even got to publishing this guest blog post, John has made another $10,000+ and has now profited $6,000+ overall as his hot streak continues, as you can see here)**
Now that things have finally clicked for John, he was willing to share the 6 key things he’s learned in the ‘struggle’:
Direct from the keyboard of John, pay attention to his persistence and willingness to keep moving forward despite the losses:
#1 Learn to accept failure
This was a hard concept for me but became absolutely essential to my turnaround. In the beginning, I always wanted to be right and that would often lead me to the hold and hope “strategy” when a play would go against me, just so I wouldn’t have to take a loss. Or I would stay in a trade in order to avoid “wasting” a day trade on a losing trade. Both of these behaviors turned potential small losses into even bigger losses. I had to change my mindset to realize that I could have a good losing trade, as long as I followed my plan and more importantly, learned from any mistakes I made.
#2 Manage your risk
‘Cut losses quickly’ is rule number one for a reason. I always struggled with how exactly to do this. At first, I used set percentages as my maximum loss, even though I hardly followed through with cutting a loss when it hit my mental stop level. I eventually switched to risking off of specific levels in the charts, but still didn’t know how to correctly choose those levels, often risking off of midday consolidation levels. Well, when those levels fail it is usually accompanied by quick, massive drawdowns. So even if I knew where I wanted to cut my loss, I often couldn’t get out until much lower, leading to bigger losses than I anticipated.
Then something Roland said at the Traders and Investors Summit in Orlando changed everything for me. He talked about how much he loved Trading Tickers but was mainly going long, so he turned the short plays in Trading Tickers upside down. This was a revelation as Tim Grittani mostly risks his short positions off of the high of day or even the previous day’s highs, these are key technical levels. Now, when I go long I am usually risking off of the low of the day or if there is a big morning spike, risking off of the low point after the pullback from the spike. Since doing this I haven’t had a trade where I have lost more than I was willing to risk when initially entering the trade. The level you risk off of will change with the type of setup you are playing, just make sure you use a key technical level.
#3 Track every play
I have been doing this from the start but wasn’t tracking everything I needed to be tracking to set myself up for success. The essential part I was missing was tracking the setup for every trade and what time I entered the trade. Once I started tracking my setups, this allowed me to break down my stats for every type of play and find where I excelled and where I was struggling. I thought I would find my edge with morning panic dip buys, and even though I was winning more than 70% of the time, my average loss was four times bigger than my average win. That is not a recipe for success. I also noticed that I had a lot of trades where my notes in the setup column of my spreadsheet said something like “stupid chase of a morning spike.” Actually writing this down helped me eliminate plays like this where I didn’t even have a plan, and focus on finding setups that were working best for me.
#4 Find your edge
This advice is largely taken from Tim Grittani’s journey to becoming a consistently profitable trader. He often talks about how he turned things around by focusing on two specific setups. The actual setups aren’t important, the point is that he found his edge and then cut out everything else and focused on what was working best. This is what I did and the turnaround on my bottom line was incredible. It took me six weeks to make back the $16,000 I had lost over my first six months trading. Before doing this, I was at the point where I could create a watchlist that essentially mirrored Tim’s watchlist, maybe differing by one or two tickers. But I didn’t have a specific plan for each stock, I had more like five possible plans. I would think, “if it has a morning panic I can dip buy,” or “if it has a morning spike I can try to get in on a pullback.” Now my watch lists are very different from Tim’s and I have one exact play I am looking for on each stock on my list. And to be clear, just because I am finding success with the setups I play, that doesn’t mean you need to play the same setups as me. We all have different strengths and weaknesses with varying amounts of risk we can tolerate. This is why tracking your stats is so important, so you can find what will work best for you.**
This follows directly from my previous point. I have narrowed my focus down to solely playing breakouts. Now I have to be patient waiting for the right setups. At one point in time, I had five open brokerage accounts that I was actively trading with. I did this to get around the PDT rule, yet my worst results came right after I opened all the accounts. Now I can go multiple days where there are no plays for me and I am okay with that. Because when there is a play, I can take full advantage of it and really make decent profits if the trade goes as planned.
#6 Never stop learning
Remember that trading is a marathon, not a sprint. I’ve been obsessed with trading and learning how to do this successfully from day one. I could have taken it easy once I was fairly sure I was consistently profitable. But no, that is the exact thing I didn’t want to do. I know that I am finally on the right track and now I am ready to take things to the next level, so I am pushing myself even harder studying video lessons and webinars and re-watching DVDs. If you are not finding success in month 1, or 3, or 6, or 12 just stick with it. Don’t trade too big so you can stay in the game, and keep in mind that you are learning a new profession so it is going to take a tremendous amount of time, hard work and dedication.
I’m SO proud of my student John for his turnaround and please do congratulate him in the comments below! And also, let his profit chart inspire you to never give up on your education as the key is to keep going and if you stay true to your mission and respect this art as a marathon and not a sprint, you will be rewarded:**
Hey Everyone,
As many of you already know I grew up in a middle class family and didn't have many luxuries. But through trading I was able to change my circumstances --not just for me -- but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!
Which is why I've launched my Trading Challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.
So when you get a chance make sure you check it out.
PS: Don’t forget to check out my 30 Day Bootcamp, it will teach you everything you need to know about trading.
Knowledge facilitates development.
Inspiring post.Learning from your trade post daily PapaJohn.Thanks for sharing your journey.Of course, as always, thanks to our Guru for his teachings and wisdom.
Way to go PapaJohn. Your journey is somewhat similar to mine. And this is what inspires me. That even though you were down big time, you never gave up and you treated it like a marathon not a sprint taking one trade and a time and gradually getting better and better….
sweeeeeet
Great John, keep it up
Thank you John Papa, and congratulations on your continued success. The information you are passing on has made another pane of glass clearer.
Awesome John. Seeing your progress on Twitter is amazing and I hope to mirror your success as your journey sounds similar to mine. I join the challenge next week so I’m excited to become part of the family.
Definitely an inspiration … congrats John. #FutureMillionaire
Well done John. It’s the inspiration I get from reading such stuff that keeps me in the game. Thanks buddy!
thanks this help to keep confident
Thank you
Congrats John, such an awesome read to a successful journey.. Tha is so much for sharing this Tim, it is absolute gold and your lessons like this one are crucial to ones success.. Brilliant again!!!
Congrats PapaJohn!, Enjoyed reading this blog posts with all the helpful tips.
Here is to your continued success!
Thanks again Tim and John. I will be reading this every morning for a week to help me focus.
Congrats John
I began studying Tim’s material and watching videos two weeks ago. OMG overwhelming!
I haven’t traded yet. I realize this is a new profession and patients is a virtue.
Thanks for sharing.
NICE!
Thank you for the Blog post John, Congratulations
🙂
I’m a new challenge student, and I just read this post about John’s lessons learned. It’s probably one of the most helpful things I’ve read so far. Thanks, John and Tim, and congratulations!
COOL!
Great article! Congratulations, this is a HUGE deal!! This inspires me even more! I cannot wait to be where your at, I will study even harder to get there! Thanks for the tips!
🙂
Thanks for the article! Congrats John, thanks for the inspiring words!
Congrats!! Thank you for sharing your story. I haven’t started trading yet…your journey is inspiring.
Awesome!
Congrats!! Thank you for sharing your story. I haven’t started trading yet…your journey is inspiring.
🙂
Papa John great blog.
🙂
congrats mate
Great insight! Thank you.
congrats good job
Congrats, on your Success! Keep up the the great work and continuous learning!
Hi PapaJohn,
And brand-spanking-new so I just wanted to drop a line and thank you for the insight I will surely take this to Heart and learn from your mistakes although I know I will make a few of my own. I anticipate losing while I’m learning but I get it that if I keep learning I will figure it out the different kind of setups, what setup works best for me, and be able to spot the the specific way the market moves in that set up when I see it. I understand my learning the recognize the nuances and patterns will allow me to increase my wealth and take advantage when I see them pop up. Keep up the good work and again thanks for sharing.
Awesome job and congrats. Thank you for sharing as it gives me and many others hope of becoming successful also through hard work and education!
John adapt and narrow down what worked for him. I am very impress how he turn it around. Great job !
YES!
Great job of adjusting and hanging in. Good rules to follow. Congrats big time!
🙂
Congratulations John!
Congratulations John.
I appreciate your story, advice and information on your journey. The thing I have noticed is how narrow and refined each strategy needs to be. I’ve had some recent losses trying to trade around work, kids and a wife who is getting ready for cancer treatment. My New Year’s resolution was to tell my wife I was leaving my job of 18 years to pursue trading but before I could share this with her she told me day after Christmas that she has cancer. Point of saying this is, I am still studying every day and refining my strategy and your story helps me know that their is a light at the end of the tunnel here. I have started putting together and tracking my strategy and things look promising. I am a little early but should have a full sample size by end of month.
Thanks again.
Wishing John and Tim and all members who read this a healthy, happy and successful year ahead!
Thanks!
Good article
Papa John would you mind posting a copy of the watch list that was so successful so I can have a better understanding of what you’re telling us.
Awesome. Congrats. Thank you
Great start for your journey John. I’ve congratulated you, but your work deserves many more! It’s so great when your hard work pays off. Congrats again, my friend! 🙂
🙂
Thank you! Congratulations! Your article was well written, concise and to the point.
Thx!
Thank you John
Well written John, & very inspirational. Your perseverance & discipline are going to take you places I feel certain! Thanks for sharing & good luck on continued success!
-Warren Prickett
Good words John! That is really something for myself and others who are just starting out to take in and constantly remind ourselves.
Congrats John inspiring story I been trying to learn everything I can failure is key to success great job on having patients I will keep reminding myself that when I’m having trouble break through a barrier in my success trading to keep on going!!!!
Congrats John!! I needed that.
Congrats John
Congrats Papa John!! This article comes at the right time for me. I’m frustrated with my trading and seems I’ve hit a plateau. I myself have been thinking of sending out an email to ask what I should do to get through it. What I get from this article is that I’m missing keeping track of my trades, I do pretty much everything else. Thank you!
🙂
I can’t wait to start my, congratulations John
Great advice .I will always keep it in mind. It is very essential to to learn from the mistakes of others.
I have started writing my rules down before I join the challenge… Congrats John Papa… Thanks @Tim
Way to go John
Yeahhhhh
Fantastic lessons thank you for sharing.. some really solid points.. congrats John on your success so far and wish you a continued profitable trading career
So true and inspirational!!!! Perfect post at the right time…..Thank you for sharing your knowledge with us. Congratulations and GOOD LUCK!
Tim so powerful introduction….Thank you!
Thx!
Good I took the time to read this. I have been on the challenge 2 weeks and haven’t made a wining trade yet. Only 3 trades and have los $600.
Thanks for sharing with us! Im just a beginner, always scared of loses but it’s part of the game and we all learn from it.😊
I’ve read a lot of posts and I must say this is by far the most useful. Your sincerity comes through loud and clear. I can totally relate. I started studying Tim’s materials and watching video lessons just over a month ago and feel overwhelmed with the amount of stuff you have to know. So far I’ve lost about $300.00 on a $1000.00 account. May sound like chump change but when you started this journey to make money, it’s a lot. I’ve had only one winning trade. I don’t know where to focus. It occurred to me that I should learn how to identify one pattern at a time as it is too difficult to try and learn all the patterns at once.
It’s a lot of material to digest, so I’m learning to be patient, which is hard for me, plus as a competitive person by nature, I hate losing! Tim says you have to find what works for you, which I guess comes by trial and error. It’s early in the game, so I will persevere. Thank you so much for sharing. Extremely helpful!
Congrats John. Also thank you very much for taking the time to write this, and thank you tim for publishing! Personally I needed this today as it was my highest loss day ( or would have been) as I was down almost 2k. I then made it back but needed to use 35k of capital which is way out of my comfort zone.
Your story above will help me focus more and slow down. Tim tells us all the time but it’s nice to hear it from others also.
🙂
Great article! I love how the ads on Papajohn’s profitly are for Papa Johns 😂
Yup!
Very useful advice John! I appreciate you taking the time to write this. I’ve always said that if you want to learn something, find someone who has already done it and has made the mistakes so you don’t have to. Thank you again and I will see you in the chat room!
Congrats brother John!