3 More Things That Losing Trades Can Teach You
Great success is certainly possible in trading. Making losses, however, is part of the game. From these losses, great lessons can be learned. Here you can read what that can initially teach you. Now you will learn more lessons about what losses can teach you, and reading these articles can help you prevent making the same mistakes and learn from those that came before you.
It is not about being right
What we see the most in this space is that people seem attracted to the opportunity to say: Exactly as predicted. However, what is much more important, is to accept that you can be wrong. In this way, you can be wrong and still trade successfully. The quicker you accept your mistake, the sooner you will recover from it and turn the tide.
Think in probabilities
Thinking in probabilities allows you to not marry your own bias. It is very human to want to feel security and certainty. One might go to great lengths to verify their decision and find reasons why the price is certain to go up or down; therefore, it is a winning trade by default. This could not be further from the truth. There is no way that the outcome of a trade can ever be a certainty. So therefore, no trade can be made without taking risks. The risk you put on essentially equals a protection mechanic in case the trade does not work out. By taking the risk and accepting the risk before you put on the trade, you also accept that the trade might not work out. This is when you think about probabilities.
Avoid revenge trading
Once you have made a loss, avoid the urge to try and make money back right away. Accept that if you take a loss, there is something you have missed. So analyze your situation, learn from your mistake, and sync up with the market before attempting a new trade. Trying to make back your losses immediately leads to emotiona l trading, which means you trade without thinking. That is a quick way to deflate your portfolio.
Losing does not mean failure
Taking a losing trade hits you in your wallet. If you have proper risk management, this should be accounted for and not a problem. On the emotional side, this might make you feel demotivated or class your efforts as a failure. However, we firmly believe that every failure is a great learning opportunity, and if you are able to figure out what went wrong and why it went wrong, you have a powerful insight in how you can improve. That is what we would class as a valuable learning moment rather than a loss or failure.
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Disclaimer:
The information provided above is not financial advice but for educational and entertainment purposes. Please do your own due diligence or consult a financial advisor before investing in any digital assets.
