dealing with losses

Hey everyone, so we've all had losing trades, but how do you deal with a loss?
Got any tips to share?

you eiher have an edge, or you dont. Its that simple

If you are struggling with a losing trade/losses it generally points to one or both of two things

a. Your risk was too big and the loss has destabilised you
b. You do not know enough about your trading edge, ie it's strike rate and resultant chances of a consecutive losing run and likely typical -maximum consecuive losing run of trades over whatever the sample size under consideration.

Psychologists suggest that the pain of a loss is equal to twice the satisfaction of a gain and so we feel them more/attach more importance to them. The distribution of winning and losing trades for any set of variables that define a trading edge is not known in advance...understand these things and accept them.

Look at it like this - As long as you have a trading edge with a positive expectancy every trade is a winner.

I suggest you learn all you need to know about your trading edge, ensure it has a positive expectancy and optimise the risk to it accordingly....this will help you to minimise the impact of a loss/losing run.

G/L

Jose Machin Cojones said:

I actually took a loss today - my only trade of the week. I can honestly say it didn't bother me in the slightest.

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I bet you had a little cry really didn't you?

Jose Machin Cojones said:

The main thing though is experience. If you want to do this, you just need to get used to taking losses, and that really only comes with experience. So the key is to get your experience as cheaply as possible.

Until you're reasonably proficient, you should be demoing, then trading very small, the building up in increments to allow you get acclimatised to each stage (although the process is the same, dropping £1000 on a trade is totally different to dropping £100).

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You're no Stronzo, but I like what you say!

TASK said:

Hey everyone, so we've all had losing trades, but how do you deal with a loss?
Got any tips to share?

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Quit for a few months until you get your head in the right place. Get over the loss completely and come back with an edge. Test it out first, whether tiny amounts or demo. Test it out for at least 3 months or more depending on the number of trades. When you start trading with real money, stick to your plan always even if you lose. Make sure you have proper risk management. Even if you find yourself hitting your drawdown limit at least you will have stuck to your plan and if you can manage that then you ahead of 95% of the population including myself. Then keep searching for your edge and repeat the steps until your are profitable.

Trading is a business - businesses have overheads - treat a loss like an invoice you have to pay.

brettus said:

Quit for a few months until you get your head in the right place. Get over the loss completely and come back with an edge. Test it out first, whether tiny amounts or demo. Test it out for at least 3 months or more depending on the number of trades. When you start trading with real money, stick to your plan always even if you lose. Make sure you have proper risk management. Even if you find yourself hitting your drawdown limit at least you will have stuck to your plan and if you can manage that then you ahead of 95% of the population including myself. Then keep searching for your edge and repeat the steps until your are profitable.

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Thank you, good stuff

TASK said:

Hey everyone, so we've all had losing trades, but how do you deal with a loss?
Got any tips to share?

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a better question would be how to deal with a loss such that it doesn't affect your subsequent trades. from loss of confidence in your system to revenge trading.

i play a lot of poker online and one of my tricks is to wind players up after I win a pot off them so they become more reckless and are easier to take money from.

Gordon Gekko said:

a better question would be how to deal with a loss such that it doesn't affect your subsequent trades. from loss of confidence in your system to revenge trading.

i play a lot of poker online and one of my tricks is to wind players up after I win a pot off them so they become more reckless and are easier to take money from.

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you show your cards when you bluff with 72 offsuit. What kind of poker games do you play? Cash table games or tournaments? I play a 100$ tournament now and then. Haven't had much luck so far, but i guess the luck should even out soon.

Taking a loss quick without hesitation seem not natural. The minute you are in you feel committed. Acting on the exit fast is the key. No thinking, only action. The longer you wait, the harder it is

regard your money as lost already when you deposit them to your broker,
if they are lost to you, it won't matter so much when you loose a trade.
only trade with money you can loose, and then loose them.
then they are only numbers in your head.
self sugestion! tell your self this,
(I will never see that money again)
this is psychological stuff, it can take years to master,
another tip is not to make your self comitted
take only momentum trades and then quickly move your stop to brake even.
if you get stopped out you won't loose anything,
with momentum trades I mean at a cross or something
when price go up more than usual with momentum,
that makes it more safe to set your self brake even
and possibly not be taken out