How to get over a big loss in Trading


Unfortunately, trading the markets incurs losses.. there is no way about it.. trading is the art of managing losses. As a new trader or someone learning to trade, you will feel a lot of emotions when you lose money and these emotions will be counterproductive to you making money from the market. It’s a funny thing trading psychology…  we have evolved as human beings to be completely crap at trading which is why it’s so difficult to do. However, personally, I’ve found trading to be extremely rewarding as an endeavour not only financially but in terms of ones own self development.

Anyway, back to the point of this post… and that’s how to get over a big loss in trading. This could mean either one trade that has lost you a lot of money or a series of many trades which have lost quite a bit of cash. Both can be extremely damaging to your trading psychology which will then mess up your ability to trade successfully. Hence, it is important to truly get over a recent loss otherwise you’ll go into your next trade with the wrong mindset leading to more mistakes.

The simple way that I’ve found which works for me is to stop trading and wait a couple of days. I know it sounds simple and it is simple but it really works for me. I never trade after any big losses as it gives my body the time to ‘forgot’ about the trade. In this I mean that I am not feeling any negative emotions going into the next trade… for me this can take a couple of days.

You know if you are feeling negative emotions if you’re still thinking about the previous trade.. you’ll be running through all the other scenarios of how you should have traded, what you should and shouldn’t have done etc. You’ve got to remember that it’s happened, it’s in the past and you need move on. If you still have these symptoms then I think you need to give it more time.

In my mind, I think of the following analogy. Each person has a set amount of trading psychology… imagine this in measuring glass of some sort. Everytime something negative happens in trading which causes you to make a mistake in trading, your levels of trading psychology go down. If this ever reaches zero, you will probably be so disgusted and tired of trading that that’s it… you give up!

However, trading psychology naturally fills naturally.. slowly so your trading psychology levels do replenish.

A big loss can mean an instant 20-30% loss in your trading psychology levels.. very damaging.

Anyway, I hope that helps.. it’s a simple technique but it keeps me in the game!

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Category: Make Me Some Money Ideas, Trading