Trading Challenge Success: How To Turn Your Losses Into Profits

Turn Your Losses Into Profits

Turn Your Losses Into Profits

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 and turn your losses into profits! 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.

The 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.

 

#5 Be patient

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:

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133 comments

Timothy Sykes

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 millionaire 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 free Penny Stock Guide, it will teach you everything you need to know about trading. :)

  2. joe g

    congrats john and many thx for posting. i’m new since august and a long way from getting there so this really helps me stay engaged for the long run.

  3. Hafid Tol

    Good Stuff PapaJohn!!!! You are an inspiration brother! I am currently making some stupid plays lately, because of FOMO and just playing to play! I have accepted the RED losses now, and don’t bag hold much anymore. The advise you give is phenomenal and will listen diligently and grow from your experience. Thanks again brother! Kill it this year!

  5. Shane

    Congrats nice job. I think I am about at that bottom spot right now so maybe there is hope. Best of luck.

  9. David Schwartz (dcsnes69)

    John Thank you so much. That continues to support my belief on taking it slow and working the kinks out. Great job and wish you many more green days

  14. Billy Puckettt

    Thanks for the info John. I’m having the same problem and been trading only a month. I had a winning day but held on to $DPW overnight because I wanted to have a winning day. Your info looks very helpful because you described me to a tee. Make that million and hope I will be there too. Good luck and thanks again..

  32. Webster Ramirez G.

    This was as inspirational as it was helpful especially now in reiterating the importance of finding what works best for you individually and sticking to your game-plan yet still remembering to always take into consideration all of the basics and rules. Best of luck to you this year John, Congrats.

  34. Nicholas Forkes

    Congrats on going red/green John and cheers for the motivation!
    Im on the downtrend but starting to turn it around

  40. Morris Dweck

    bravo! love it and very inspirational. i see the same thing with me as well. And have learned alot over the past 1 and a half and my mind set has changed drastically
    wtaching trading tickets like 3 times helped so much. its my go to DVD when i need to fix my mindset

  43. Jeremiah Gutierrez

    Hey john! Congrats! You’ve come such a long way, and you have so much more to learn that will help you become the successful trader you want to be!

  45. Paul

    Many congrats to PapaJohn! Your story is inspiring.
    But also, this post contain many, so valuable lessons. I greatly appreciate your effort and Tim’s in putting this together.

    Best
    Paul

  46. Kelly

    Congrats John!! Thank you for sharing your journey! I am a new day trader and it helps to hear how other people struggle and reset, it is very motivational. Hoping to find my groove soon! But, until then will continue studying!

  47. Cal

    Great job John. I am going through the same problems that you were going through. Your story is a great inspiration for me and I know that giving up is not an option. Studying the past will help give me a much better future. Thank you John and keep up the Good Work.

  50. Fishdogmillionaire

    Brilliant Blog. Just what I needed today. After winning 4 of my last 5 trades I had my biggest loss day today just because I wasn’t disciplined at all. Being process driven and everything you mentioned in point 3 works so much better for me. Thank you for reminding me of that.

  55. ExcelTrader

    Inspiring journey. Congrats John, you are on the right track to becoming the next millionaire student. I hope to join the league of millionaires some day.

  56. scott sweet

    Awesome Testimony John,

    I believe that I am slowly making a turn myself, I started with about 5K, and have seen in down to about $1100. Today it sits around $3500. I am still making stupid mistakes, but minimal compared to one month ago. Thanks for sharing, was very helpful.

    Good Luck brother

  58. Sosa

    Congratulations John,
    Education is key!
    It’s not a sprint but a marathon, definitely got inspired from you sharing your experience so far.
    Thanks

  62. Miah

    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!

  63. Shayne

    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.

  64. Sophia Little

    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!

  65. Sandra

    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.😊

  66. Edison

    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.

  67. Sylvia

    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!

  68. Rufio

    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

  70. Augustine

    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

  72. Greg Halliwill

    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!

  75. Steven Wiltse

    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!!!!

  76. Desi Samples

    Good words John! That is really something for myself and others who are just starting out to take in and constantly remind ourselves.

  77. Warren Prickett

    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

  80. AnneMarita

    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! 🙂

  82. Carl moody

    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.

  84. OceanRider

    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!

  106. David H

    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!

  107. Nancy Haley

    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.

  113. Anonymous

    Congrats!! Thank you for sharing your story. I haven’t started trading yet…your journey is inspiring.

  114. Eumeka Odoms

    Congrats!! Thank you for sharing your story. I haven’t started trading yet…your journey is inspiring.

  117. Alex Z

    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!

  118. Maria

    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!

  120. Cynthia Lucas

    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.

  130. Todd

    Congrats PapaJohn!, Enjoyed reading this blog posts with all the helpful tips.
    Here is to your continued success!

  131. Wayne Willmore

    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!!!

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