Winning and Loosing Lies With The Traders Not The Trades
Wins and Losses are familiar to us all, the pain of loss and the joy of a win. There is no confusion there.
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.
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.
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.
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.
Can you answer the following 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.) Do you have a rule of when to move your stop to break-even?
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.
There are 2 base reasons why Investors won't take a loss:
1. They can't admit they're 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.
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.
Winning and losing traders have a different view of the pain from a loss, winners don't take it personally. They look at the loss and see that they need to change their approach or execution not that they are personally flawed.
A winning trader distinguishes himself from what he does. They are aware that their worth as a human being is not linked to their skill at trading, but that they will need to increase their skill and experience to improve their approach and execution. They use the pain they feel to motivate themselves and increase their drive 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. - 23162
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.
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.
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.
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.
Can you answer the following 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.) Do you have a rule of when to move your stop to break-even?
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.
There are 2 base reasons why Investors won't take a loss:
1. They can't admit they're 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.
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.
Winning and losing traders have a different view of the pain from a loss, winners don't take it personally. They look at the loss and see that they need to change their approach or execution not that they are personally flawed.
A winning trader distinguishes himself from what he does. They are aware that their worth as a human being is not linked to their skill at trading, but that they will need to increase their skill and experience to improve their approach and execution. They use the pain they feel to motivate themselves and increase their drive 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. - 23162
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 etf 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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