Lost money doesn’t have to mean losing your ability to clearly think. However, it is a common by-product of losing money on a regular basis. Panic sets in, fear develops, and even a sense of shame takes hold of the situation and suddenly a clear and level headed trader is out and about making excuses, hanging onto the bad trade like an ugly scab, and refusing to move forward while they develop excuse after excuse about the trade. There is a psychological aspect to losing money that few traders, especially new traders have to experience in order to move past it.
Some people need to be right all the time. Some people feel that being wrong or making large errors are a reflection on a part of them that is unacceptable for some reason. If you hold that belief, you are going to have a hard time holding onto objective thought in the face of losses. Loss doesn’t mean that you are not worthy or that you are an insufficient individual. It just means you made a poor choice and you now have the opportunity to learn from it. If you insist on taking loss personally, and turn it into a personal reflection of you and what type of person you are, then you are most likely going to lose your objective thought and begin to panic trade.
When you are able to maintain a level of flexibility and offer a little grace in your own direction, loss becomes less of an uphill battle and more like a simple event that happened that offered you the opportunity to learn and grow. The majority of the human race grows and learns during the negative experiences and challenges. Trading is no different. While you might have all of the right information you may not be able to learn the lessons until you implement the process, and mess up the process. It is just a learning curve and nothing more, nothing less.
Your own perspective will determine whether you start panicking or believing that you aren’t good enough to stay in the business. If that is an honest assessment, then fine. It is not for everyone. However, in most cases if you got into trading because it held some sort of interest for you (financial or otherwise) then the magic is still most likely there once you get over your mistake. It is normal and natural to make errors and poor trades. Even the most successful individuals make mistakes and bad trades.
Of course you want to minimize the damage that poor trades and errors can cost you, especially in the beginning when you are just learning. Keep your risks within the realm of money you can live without. That way if you lose it, you have options. There is nothing worse than trying to recover from losing everything, including your house and your grocery money in the trading world. The basic rule of thumb, “Don’t bet the house,” applies in gambling as it does in day trading.
In many cases, a loss can serve as a wake up call, as a service to yourself and your trading future that you need to re-evaluate your trading strategy, the market conditions, or the information you are basing your trades on. In some cases, it is nothing more than mere bad luck. Either way, honestly evaluating the situation is the only way to pull a profit back and prevent your account from dwindling down to nothing.
As you assess the possible options on a daily basis, remember that you are free to make mistakes, you are also free to create new opportunities and try new things. Maintain your focus and composure and it won’t be long before your trading days are less stressful, easier to accept, and offer more opportunities for successful trading.
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Tags : stock market,work from home,home business,investing,online trading,day trading,forex,futures
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