Winning and Loosing Lies With The Traders Not The Trades
To win or lose a trade is a familiar thing. We have experienced bot the joys and pains of it.
But, when we look at losing trades, most of the times it's not the strategy that has failed but, rather, the trader.
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.
You can't delve into the topic of position entry thoroughly without speaking of stops. The question is, "Why are stop losses used by so few investors?" If not using stops is a weakness for you then you want this info. This info could mean the difference between on time retirement with a fat nest egg or just 'getting by' at a later retirement date.
By planning and placing stops you plan to win, but prepare to take losses and still live to trade another day. So we need to look at the trader psychology around taking losses.
A professional trader needs to know where the exit point in their trades are before they start trading. Having a visual of a wrong trade is key so a trader can know when to get out fast. This is a basic knowledge that all pro traders need to have.
What are the answers to these questions?
1.) When should you stay on board and when should you bail out?
2.) Do you have a rule to tell you when to sell a losing stock?
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.
Refusal by an investor, to take a loss falls under two headings:
1. Inability to admit they are 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.
The loss is personalized and pulls on their emotions. It is easier to deny the loss than own up to the pain of the loss. He will either lose everything before he will seek to change or he will quit trading.
2. Taking that large of a hit would damage their portfolio greater than it can recover from.
But in reality, there's no such thing as just a paper loss. The stock (bond, option) is worth what it's quoted and the loss exists whether you realize it or not.
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.
The winning trader uses a different strategy from the losing trader by regarding the pain from the loss in an impersonal way. They use the loss as a sign that something went wrong with their approach, or their execution, but NOT that something is wrong with them.
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.
These are responses you learn and you can control them. Losses bring pain AND the possibility for growth. It is all in what action we take after the pain comes that is most important, not the actual losses.
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.
My constant reminders about proper stops and risks are one of the strongest parts of my one year mentorship program. Even after you understand my system 100%, it's still good to hear me tell you, "Don't move your stop" or "Be sure to take profits when the system says to, not too early and not too late." Most my students like the mentorship part as much or even more than the course itself. - 23159
But, when we look at losing trades, most of the times it's not the strategy that has failed but, rather, the trader.
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.
You can't delve into the topic of position entry thoroughly without speaking of stops. The question is, "Why are stop losses used by so few investors?" If not using stops is a weakness for you then you want this info. This info could mean the difference between on time retirement with a fat nest egg or just 'getting by' at a later retirement date.
By planning and placing stops you plan to win, but prepare to take losses and still live to trade another day. So we need to look at the trader psychology around taking losses.
A professional trader needs to know where the exit point in their trades are before they start trading. Having a visual of a wrong trade is key so a trader can know when to get out fast. This is a basic knowledge that all pro traders need to have.
What are the answers to these questions?
1.) When should you stay on board and when should you bail out?
2.) Do you have a rule to tell you when to sell a losing stock?
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.
Refusal by an investor, to take a loss falls under two headings:
1. Inability to admit they are 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.
The loss is personalized and pulls on their emotions. It is easier to deny the loss than own up to the pain of the loss. He will either lose everything before he will seek to change or he will quit trading.
2. Taking that large of a hit would damage their portfolio greater than it can recover from.
But in reality, there's no such thing as just a paper loss. The stock (bond, option) is worth what it's quoted and the loss exists whether you realize it or not.
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.
The winning trader uses a different strategy from the losing trader by regarding the pain from the loss in an impersonal way. They use the loss as a sign that something went wrong with their approach, or their execution, but NOT that something is wrong with them.
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.
These are responses you learn and you can control them. Losses bring pain AND the possibility for growth. It is all in what action we take after the pain comes that is most important, not the actual losses.
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.
My constant reminders about proper stops and risks are one of the strongest parts of my one year mentorship program. Even after you understand my system 100%, it's still good to hear me tell you, "Don't move your stop" or "Be sure to take profits when the system says to, not too early and not too late." Most my students like the mentorship part as much or even more than the course itself. - 23159
About the Author:
Learn how it's very possible to make 6% per month in your investment accounts using etf trading! "Big A" is a recognized expert in the world of etf trading system & reveals trading & investment secrets that have been kept under wraps by hedge traders for years. Get his free report & webinar today!
posted by X - Men @ 6:00 AM
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