5 Tips For Managing Losing Trades (It Happens To Everyone)

Beginner Questions
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Losing trades happen. They contribute to the voyage. There is no such thing as a consistently successful trader or investor. All of the well-known investors and traders you are familiar with have incurred significant LOSSES throughout their careers. It is completely typical. Did you know that in his thirties, the renowned hedge fund manager Ray Dalio lost everything? He fell broke. He was required to commence from scratch.

This post will discuss the significance of losing trades and how to cope with them.

Let us commence by stating the obvious:

  • Be wary of those who profess to never lose.
  • Avoid individuals who brag about win or success rates that are impossible.
  • Losing trades are inevitable! You are not alone .

Now, let’s talk about what bad trades mean and 5 tips for managing them:

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Number 1: A losing trade is different from a bad trade

Before placing a trade, the most experienced traders are well aware of their risk. Each losing trade is a small part of a larger process that relates to a thoroughly tested and studied system, plan, or strategy. For experienced traders, failing a trade is a calculated event. They defined their risk, position size, stop-loss order, and profit objective.

A poor trade is quite distinct. A poor trade indicates that someone endangered their hard-earned money without a plan or method. A bad trade is reckless and careless trading. This frequently occurs with novice investors or traders who are unaware of the time, study, and research required to create a rock-solid plan. Remember the distinction between a calculated losing trade and a poor trade executed without a plan or process.

There are numerous strategies to initiate a plan, system, or procedure. Paper trading, backtesting, and/or working with experienced traders who provide constructive feedback are all effective methods to begin. Do not risk your money before conducting investigation.

Number 2: Every losing trade provides data to get better

As we’ve mentioned multiple times, losing trades are inevitable. However, consider that losing trades also contain insightful information and data. You can learn a great deal by analyzing unsuccessful trades. :mag:

At the conclusion of each trading day, week, or month, seasoned traders analyze their losing trades in depth. What patterns do you observe? What is their common ground? Why did they take place? A trader or investor can adjust their strategy based on the newly discovered information.

Number 3: Do not let losing trades impact your health

Your mental and physical health are equally essential to your financial well-being. Don’t allow losing trades to affect either of those factors.

If your system is failing or a string of losing trades is affecting your emotions, step away from your computer or phone. Turn off everything and leave. The markets have existed for centuries and will continue to exist indefinitely. When you are ready to return, they will be present.

Get up, get some fresh air, and when you’re ready, return to the arena.

Number 4: Share your experiences with others

Traders and investors from all over the world are interested in your anecdotes and unsuccessful trades. We all partake in these invaluable experiences. Social networks enable users to converse, share, and encounter people who are experiencing similar situations. Each of us can learn from the others.

Certainly, it’s tempting to share your wins or to act like you’re the greatest trader ever, but it’s evident that we learn together and improve when we share lessons from our losses. This is where the most profound insights can be discovered, and this is where we can grow as a community of market-beating traders.

Share and solicit constructive comments!

Number 5: Keep Going

The markets are a game of learning, relearnt, and advancement. Daily, new concepts, fashions, and narratives emerge and disappear. The journey is lengthy and nonstop. When implementing your trading or investment strategy, it is essential to keep the long-term in mind. One or two losing trades in a single day or week are a minor portion of what lies ahead in the coming months and years.

Keep trying. Keep constructing. Continue to refine your plan. Analyze the data.

We trust you enjoyed reading this article!

We hope that you learned something novel or insightful!

Please provide feedback below, and our team will review them.

10 Likes
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Can I please add avoid overtrading too?
It is one of the worst things a trader can do. AVOID it.

6 Likes
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Good points! Thank you man.

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i think all is important points but number 2 is more important. when we make losses we got frustrated but it always provide us a good lesion that helps a lot.

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A thing I learned in B2B sales is that its always easier to sell more stuff to existing customers than it is to find new ones.

You can think of your winning trades as existing customers. Its going to be easier to maximise the return from the group of winning trades than it is to reduce the group of losing trades. Put as much effort into learning from the winners as most traders do trying to learn from the losers.

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Cutting looser short is something I struggle with - the emotions behind holding on the loosing trade is very hard to manage - form a strategy for those looses and then follow it regardless of what ur mind thinks at the time - actually cutting looses short is what in my mind makes a well defined successful trader - its the only thing that u need in trading world to be a successful trader beside not to try to recover that lost trade - once u loose u better stop for the day - this will ensure no mistakes happens in that single emotional day and this brings u next day with lots of hope to recover so a lost trade has an impact emotions on the trader
When ur lose trade pattern form on the chart knows that u are only ur enemy If u dont close that trade as its very hard to do it but u got to do what the plan says every time regardless

In looses a trader might things oh support will helps me - oh an EMA might helps me or a trendline might helps - remember that all those can fails and price slice through them so follow what the plan says regardless of what theres in the market that might or might not helps - do it regardless and soon u will master cutting looses short and If u master that and then also master letting winner runs u will have a winning formula which will ensure ur equity curve keeps hiking with small hiccups in between

Yesterday I cut a lost trade for -17 pips which was average looses in my trading plan

1 Like