Every trader who ever goes broke does it the same way.
I have heard it said that Traders go broke because they are under capitalized, that isn't true. If You can lose $100.00, you can lose $1,000,000.00. The problem is the same in both traders, the refusal to let go of losses. The difference between the pro and the amateur isn't necessarily his/her trading ability. Trading is easy!
The difference is in how he/she takes a loss. A disciplined pro will say, " I will stop the bleeding here if I am wrong." The amateur says, " I am right and eventually the market will come back in my favor." If You are thinking that, You have lost Your advantage.
While a pro will let 1 profitable trade kill 10 losses, an amateur will let one loss eat the profits of ten profitable trades. Both traders had the same number of trades but one will end the month in profit and the other will end the month in stress and pain.
Cutting a loss quickly soon ends your attachment to that trade and allows You to pursue a more profitable trade set-up. Part of the reason it is so hard to cut a trade is because You waited forever for that trade set-up and now You not only have to admit that You did not have the advantage that You thought that You did, but now You have to start the process all over again and with a loss.
DON'T MARRY ANY POSITION; THE MARKET CAN CHANGE IN AN INSTANT!!!!!!!!
IT IS ESSENTIAL THAT YOU HAVE AN EXIT STRATEGY (ONE THAT WILL CAUSE YOU THE LEAST AMOUNT OF PAIN)IF THINGS DON'T GO AS YOU PLAN!
ANY TRADE CAN TURN INTO A LOSS!
If You play this game long enough, You will eventually meet with disappointment. It happens, cut and move on. The market will give You another chance to make profit.
Never allow yourself to become wounded beyond repair in the market, either financially or emotionally. Cutting a loss means that You love Yourself enough to save yourself.
If You are going to win at this game, You have to have the capital to play and cutting trades that have lost the edge is one way to thrive here.
Gotta learn to save yourself! If You are getting stopped out frequently, You have gotta to rethink your strategy because something is wrong.
Free Your mind to find good trade set-ups by cutting trades that are not working in your favor. Holding on to diseased trades only punishes You and eventually it can break You
The biggest discipline that a great trader learns is how to cut a loss
YOU CAN DO THIS (^_^)
An emotional write-up, thanks
ReplyDeleteHow true. Trading can destroy you in ways that you didn't even know existed. Yes it can be very rewarding, but it can also be a very destructive force not only financially but also spiritually. I have had times that I wish I never was exposed to trading. This comes from someone that started with only 30K and turned it into over 1 million in 2 years. The worst part is that my involvement in trading has put me in a position that I know no other means to make a substantial income because I have been out of the work force too long. Been trading full time since 1998. Been through too many gut wrenching bear markets the past 13 years. I have been a good enough trader to hang on the past 13 years, but at times I wish I just busted out or got out and stayed out after my windfall in 2000. I feel as Trading has overtaken my life and that I am actually addicted to the stock market now. If the market is open and I don't have access to it I start to feel like I am having an anxiety attack.
ReplyDeleteOh, I so understand. I hope You are not serious about the anxiety attack. I went out and found a job to keep me out of the market so much because that was about all that I was doing as well. I have had the job about 3 weeks now and am thinking of quitting because I am tired, but I keep going there to give me some kind of balance with my trading. I don't even have cable. I always think when I am working that I am going to come home and watch a movie, but I check the market instead, and lol You know the rest of the story. Unlike You, I had a huge learning curb the market beat my brains out for years before I got the big picture. The holy grail of trading is discipline. Thanks for the comment and I so hope that You find balance, a Honey might give You the balance that You seek, or You can get a job that You have to talk yourself into going everyday to try to get balance....lol. Good luck dear Friend, every trader who loves the game knows exactly what You are going through. I will send up a prayer for You. You are always welcome to email me if You wish to speak further, but You know we'll end up talking trading for hours. It is important for us to maintain a healthy balance with our trading, but it can be soooooo hard
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