At some point along your journey those thoughts will creep into your mind.
Newbie traders often trip up by fixating on immediate gains instead of focusing on learning, studying, and embracing the process.
Last week, I hit a rough patch with six losing trades in a row! Sounds like a confidence breaker?
Not for me.
I’m about to share three ways to turn losses into potent lessons and level up your trading game.
Table of Contents
#1: Acknowledge and Learn From Losses
There are almost 8,000 trades on my Profit.ly.
Unlike most traders you’ll find on social media…I don’t hide from my trades.
Scroll down and you’ll see wins and losses.
And while I’m not happy with myself when I take a big hit…I don’t sweep those losses under the rug…I pick them apart and try to dissect what went wrong.
Yes…it is not a fun feeling…
You have to figure out what you did wrong and what you need to do to fix it.
Sometimes you can lose on a trade and it can be bad luck.
I’m not really talking about that. I’m talking about the losses that you know you messed up on.
Doing things like:
- Getting overly aggressive
- Making decisions on FOMO
The more you’re aware of your flaws…the easier it will be to correct them down the road.
One thing that really helps me is journaling my trades.
Things I like to include are:
- My entries
- My exits
- Reasoning for the trade/catalyst
- Risk vs. reward
- Overall market conditions
I want to figure out how I can be better next time. It’s not about degrading myself or having negative self-talk.
A trading loss is an opportunity for me to improve.
#2: Exercise Patience and Discipline
If I’m trading poorly the last thing I want to do is to overtrade my way into getting better results.
Instead, I will try to laser in and focus on my absolute best setups.
If you’re a newbie that might mean you have to study more.
My top student, Tim Grittani, was not profitable during his first nine months…and that’s also true with Jack Kellogg, who failed to make money in his first year trading.
It’s not unusual for me to take the day off from trading and just watch the market after experiencing a bad loss or go through a rough patch.
A good way to stay disciplined is again to review your trades. And constantly remind yourself of your strengths and weaknesses.
If there’s a strategy you’re not good at then trade it small or paper trade it. You should try to lose as little as possible as you’re learning.
#3: Focus On Risk Management
I preach cutting losses quickly.
But if you’re in a losing streak then sizing down and practicing is also a viable option.
I don’t get shook if I lose a couple of trades in a row…or even six like I did last week.
But if you don’t have a track record yet then your confidence struggles during losing streaks.
Don’t trade then…study…and build your confidence up.
Risk management is not about avoiding losses – it’s about managing them.
It’s about taking control of your trading journey and ensuring that your losses are kept in check.
It’s about making sure that a minor slip-up doesn’t snowball into a major disaster.
It’s about safeguarding your portfolio and ensuring your longevity in the game.
Earlier this year I suffered one of my worst losses in years…
I was not happy about it. But I knew it was an opportunity for me to improve.
If you want to improve as a trader and are unsure what it takes to go to the next level then I encourage you to…