How excellent traders handle losing trades
In the trading industry, winning and losing are commonplace. Whether seasoned traders or newcomers, losing trades will equally fall upon everyone. However, when faced with sudden losses, how one correctly handles losing orders greatly distinguishes traders from one another. Today, let's talk about the topic of losses—how excellent traders deal with losses.
1. Set reasonable stop-loss positions
When faced with order losses, the most important matter is to effectively and logically execute stop-loss orders. The stop-loss position should generally be decided before placing the trade, rather than hastily considering it after the loss has occurred. Once the trading position shows a negative value, the trader will inevitably experience emotional fluctuations to some extent, and sometimes unreasonable stop-loss lines may be set due to fear. Only the stop-loss position determined before placing the order is the most rational and logical.
2. Timely summarize the reasons for losses
When our trade has been stopped out and we face the loss figures on our account, the first thing we need to do is analyze and determine whether this trade aligns with our trading strategy, whether my previous technical analysis was rigorous enough, and if there were any overlooked market details—in short, summarize the reasons for this loss. If, after rational analysis, we still find no flaws in the trading decision, then this loss is a normal loss and a necessary price paid on the road of executing the strategy. Conversely, if post-analysis reveals shortcomings in this trade, timely trading records need to be made to remind ourselves not to make the same mistakes in the future.
3. Timely adjust mindset and build a healthy and positive mentality
Based on my past trading experience, over 80% of mindset issues arise after losses occur. Whether one can timely adjust their mindset after a losing trade will become the final dividing line between excellent traders and mediocre traders. After a losing trade, traders are bound to feel sad and guilty. To quickly escape this unpleasant mental state, most people will want to quickly make up for their mistakes and recover their losses, which will lead to their next trade being affected, making it difficult to make objective and rational judgments, becoming even more aggressive than usual. However, this mental state can further induce losses and trigger a vicious cycle—many experienced traders also suffer significant losses for this very psychological reason. Therefore, after a loss occurs, temporarily staying away from the market, engaging in distracting activities, learning to meditate to refresh the mind, etc., can effectively help us adjust our mindset in a timely manner, ensuring that each trade is the result of independent thought.
