| Traders Not Trades Bring Wins or Losses |
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| Written by Patrick Deaton |
| Wednesday, 04 November 2009 04:55 |
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Wins and Losses are familiar to us all, the pain of loss and the joy of a win. There is no confusion there.
Wins and Losses are familiar to us all, the pain of loss and the joy of a win. There is no confusion there. However in considering the loss of a trade, the strategy is usually sound, it is the trader that came up short. Yes, that probably means you. But, today I'm going to talk about how to stop losing money and become a winning trader. Before you even place an order, deciding where to buy or sell is always connected to where you place your stop-loss order. If you want to talk about position entry, it should include a comprehensive explanation of stops. Why do so many investors fail to take advantage of stop losses? It you are one of those not using them, listen up, you'll want to know this. Stop losses can spell the difference between meager late retirement and on time comfortable retirement. When you have a plan for placing stops, your wins will out weigh you losses, and when the losses come you will come out on top because you will still be around to trade. The traders psychology of loss taking bears looking at here. All professional traders understand they must know where they are getting out before they get in. They have to know ahead of time what a wrong trade looks like so they can exit it quickly. This is a rudimentary fundamental that EVERY professional trader knows the answer to. Are you able to respond to these questions? 1.) When should you stay on board and when should you bail out? 2.) When a stock is losing, do you have a guide that lets you know when to sell? 3.) Do you have a rule of when to move your stop to break-even? 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. For many traders a realized loss is a huge admittance of being wrong and that is just too hurtful to acknowledge. To them it is linked to being a failure at life and their self image is directly affected by this perceived failure. 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. Their portfolio, because of its size, can take a hit that big. 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. 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. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Learn how it's very possible to make 6% per month in your investment accounts using etf trend trading! "Big A" is a recognized expert in the world of etf trend trading system & reveals etf secrets that have been kept under wraps by hedge traders for years. Get his free report & webinar today! |