Traders Not Trades Bring Wins or Losses
To win or lose a trade is a familiar thing. We have experienced bot the joys and pains of it.
However in considering the loss of a trade, the strategy is usually sound, it is the trader that came up short.
Well, yes there is a good chance this described you. In this article I will talk about ways to change all that. Your stop loss order is a really good place to start, this should be decided before you place an order.
No discussion of position entry is complete without a thorough explanation of stops. But I'm left to wonder why so few investors use stop-losses. If you're guilty of not using stops, you need this information. It might just mean the difference between retiring on time with a healthy nest egg or retiring later and still just "scraping by."
Plan and place stops equals your plan to win, and you are prepared to have a loss but make it through to continue trading. A look at the traders psychology of loss taking is in order here.
Every pro trader has to have a point in their minds denoting when they will get out, before they will get in. This has to be known before hand so that when the moment comes they can get out quick. This is a down-home basic knowledge the each pro-trader has to have.
What are the answers to these questions?
1.) How do you know if you should sit tight or cut your losses?
2.) Is there a set point that indicated to you to sell losing stocks?
3.) Is there a set point for you to break-even by moving your stop?
If you can't answer these questions, you're not alone. And what it means is that you need to establish some rules for yourself, especially when you go to short stocks. But, all the trading rules in the world are meaningless if you don't use them. That's why you and I need to "talk turkey" about what's really going on with you when you refuse to manage your risk in a proactive and professional way.
Many investors refuse to take a loss for two basic reasons:
1. They can't admit they're wrong.
Though not really avoidable, a loss is seen as a personal failure. This is a painful thing to admit for a large portion of traders, like it illustrates failure at life. It also takes away from their positive self image.
They personalize the loss and experience emotional pain. Many traders prefer to remain in denial instead of acknowledging their losses are causing them pain. This type of trader often has to lose it all before he begins to change (or gives up trading).
2. Taking that large of a hit would damage their portfolio greater than it can recover from.
Losses aren't just on paper, they are real. The loss is what it is and the quoted price is it's value.
Both of these examples are a form of self-delusion that millions of investors, both large and small, suffer from. Just look at AIG, Merrill Lynch, WAMU, Lehman, etc. ... and you can take comfort in the fact that self-delusion is no respecter of income bracket or social standing.
If this article is making you uncomfortable or bringing up feelings of anger or powerlessness, then that's a good sign. It means you have enough self-awareness to change.
A winning trader will have a different view of losses than a losing trader. He doesn't take it personally. He takes it as a sign that he needs to revamp his approach or execution no that it is a sign that he as a person is lacking.
Separating themselves from what they are doing is what a winning trader does. Either they know it or learn that the problem is either in their approach or their skills not in their worth as a human being. Changing the pain of a loss into a motivational factor that increases their quest to be a better trader.
Both are learned responses and within your control. The opportunity for growth from the pain of losses is the same. It's what we do with the emotional pain of a loss that matters, not the loss itself.
Utilize faithfully my verified ETF Trend Trading System and develop winning habits. Practice the principles, keep an eye on your position size relative to your portfolio and the product will be an overall growth in your portfolio.
The continued reminders about "proper stops and risks" is one of the main points in the 1 year mentorship program. When you have a full understanding of my system, it will be important for you to hear me say "Don't move your stop" and "Take your profits at the time the system says to not before or not after". The course itself is top notch, but the mentorship is valued more highly among the majority of my students. - 23226
However in considering the loss of a trade, the strategy is usually sound, it is the trader that came up short.
Well, yes there is a good chance this described you. In this article I will talk about ways to change all that. Your stop loss order is a really good place to start, this should be decided before you place an order.
No discussion of position entry is complete without a thorough explanation of stops. But I'm left to wonder why so few investors use stop-losses. If you're guilty of not using stops, you need this information. It might just mean the difference between retiring on time with a healthy nest egg or retiring later and still just "scraping by."
Plan and place stops equals your plan to win, and you are prepared to have a loss but make it through to continue trading. A look at the traders psychology of loss taking is in order here.
Every pro trader has to have a point in their minds denoting when they will get out, before they will get in. This has to be known before hand so that when the moment comes they can get out quick. This is a down-home basic knowledge the each pro-trader has to have.
What are the answers to these questions?
1.) How do you know if you should sit tight or cut your losses?
2.) Is there a set point that indicated to you to sell losing stocks?
3.) Is there a set point for you to break-even by moving your stop?
If you can't answer these questions, you're not alone. And what it means is that you need to establish some rules for yourself, especially when you go to short stocks. But, all the trading rules in the world are meaningless if you don't use them. That's why you and I need to "talk turkey" about what's really going on with you when you refuse to manage your risk in a proactive and professional way.
Many investors refuse to take a loss for two basic reasons:
1. They can't admit they're wrong.
Though not really avoidable, a loss is seen as a personal failure. This is a painful thing to admit for a large portion of traders, like it illustrates failure at life. It also takes away from their positive self image.
They personalize the loss and experience emotional pain. Many traders prefer to remain in denial instead of acknowledging their losses are causing them pain. This type of trader often has to lose it all before he begins to change (or gives up trading).
2. Taking that large of a hit would damage their portfolio greater than it can recover from.
Losses aren't just on paper, they are real. The loss is what it is and the quoted price is it's value.
Both of these examples are a form of self-delusion that millions of investors, both large and small, suffer from. Just look at AIG, Merrill Lynch, WAMU, Lehman, etc. ... and you can take comfort in the fact that self-delusion is no respecter of income bracket or social standing.
If this article is making you uncomfortable or bringing up feelings of anger or powerlessness, then that's a good sign. It means you have enough self-awareness to change.
A winning trader will have a different view of losses than a losing trader. He doesn't take it personally. He takes it as a sign that he needs to revamp his approach or execution no that it is a sign that he as a person is lacking.
Separating themselves from what they are doing is what a winning trader does. Either they know it or learn that the problem is either in their approach or their skills not in their worth as a human being. Changing the pain of a loss into a motivational factor that increases their quest to be a better trader.
Both are learned responses and within your control. The opportunity for growth from the pain of losses is the same. It's what we do with the emotional pain of a loss that matters, not the loss itself.
Utilize faithfully my verified ETF Trend Trading System and develop winning habits. Practice the principles, keep an eye on your position size relative to your portfolio and the product will be an overall growth in your portfolio.
The continued reminders about "proper stops and risks" is one of the main points in the 1 year mentorship program. When you have a full understanding of my system, it will be important for you to hear me say "Don't move your stop" and "Take your profits at the time the system says to not before or not after". The course itself is top notch, but the mentorship is valued more highly among the majority of my students. - 23226
About the Author:
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posted by X - Men @ 12:07 AM
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