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How To Deal With Losses In Trading
No one likes to lose. Watching your p&l shrink can be stressful. Is there a healthy way to deal with losses. I think so but for me it is a personal journey. One of the ways I tend to think about losses is that they are a business expense. No business can run and operate with out expenses. It would seem silly to be a successful trader without having some losses. Statistically traders do have books of business that run at 52% winning trades so having losses is something we need to be comfortable with. Here are some pointers to help.
- Keep your position size normal by not having your stop loss to tight. Keeping your stop loss to tight will increase your chances of a heavy loss. Normal losses are fine but heavy losses will have a tax both mentally and to your p&l.
- Remember that losses are a part of business, you must earn your seat as a trader and losses are a part of that.
- If it is extremely painful to take a loss it may be because you don’t have an edge, If you are trading randomly and your sub conscience knows that, then maybe you should listen. You must have an edge to make money and if you don’t know if you have an edge then you may not have one.
Watch the video below showing my trading loss for the week of April the 23rd 2016. Equity is IPG and I received a full size loss.