|
|
Traders Not Trades Bring Wins or Losses
You know the difference between winning and losing trades -- we've all experienced both and know the joy and the pain well.
But, when we look at losing trades, most of the times it's not the strategy that has failed but, rather, the trader.
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.
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."
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.
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.) Is there a set point for you to break-even by moving your stop?
Are you unable to answer these questions? You aren't alone. This indicated that you should be establishing some rules, especially when going to short stocks, but trading rules don't mean a thing if they aren't used. This is why we need to have a frank discussion about why you aren't managing your risks in a hands on way, like a pro should.
Refusal by an investor, to take a loss falls under two headings:
1. Inability to admit they are wrong.
A realized loss is a great big unavoidable acknowledgment of wrongness. For many traders, this is just too painful to admit. It's interpreted as an allegory for a total life failure or feeds a persistent, negative 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. 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.
These two categories of people are not looking at the trading business with clear eyes. They are looking at it with blinders on and this narrowed vision is plaguing traders everywhere. Big business, small business, large portfolio and small, the elite crowd and the common man.
Are you feeling uncomfortable with what I am saying?... or powerless, or angry? Good! That is a sign that you are capable of making the changes you need to.
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.
Winning traders separate who they are from what they do. They know, or learn, that their trading faults lies in their approach or their skill level but not in their fundamental worth as a person. The pain they feel is quickly transmuted into motivation, which fuels their desire and determination to become 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.
Stick with my proven ETF Trend Trading system and make winning a habit. Study; ask questions and monitor your position size relative to your portfolio and you will end up on the winning side more often than not.
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.
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!
|
 |
Please Rate: |
|
Rating: |
 Processing ... |
(Average: Not rated) |
| Views: | 13 | |
|
| More Articles from Investing | | |
| Top Articles in Investing | | |
|
