Losses are an inevitable part of the process of trading and until one accepts this then losses are going to heavily impact your trading. In this article, we explore the mindset of trading and why losses don't deter me from pursuing my trading goals.
Embracing Risk
One of the fundamental principles of day trading is understanding and embracing risk. As traders, we have to acknowledge that every trade carries a certain degree of risk, and losses are simply a part of the risk-reward equation. Rather than viewing losses as failures, I see them as learning opportunities and a natural consequence of participating in the market.
Focus on Probability
If I am to be successful I know I have to focus on probability as a whole rather than individual outcomes. The way that I have personally tried to manage this is by assessing my trading performance in blocks of 20 trades rather than one at a time. This allows us to be merciful to ourselves and our performance and certainly gives me more perspective.
Learning from Mistakes
My losses are my ultimate source of feedback and learning. Whether we like to accept it or not it is our losses that will make us successful. Why is that the case? Losses, particularly when they went against our plan are fantastic opportunities to consider why we took that trade and what rules we can develop to ensure that the same type of loss doesn't repeat. Eventually, by eliminating mistakes we will improve our profitability. I will address these aspects separately in future posts along with some techniques.
In conclusion, losses are an inevitable part of day trading, but they don't deter me and if you are struggling with this then you should consider adapting your mindset. Ultimately, it is this mindset that sets them apart and allows them to thrive in the world of day trading.
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