Hi Everybody,
Yesterday was a good lesion in that losses can and do occur. Many Gurus will never mention losses, but they do not know how the markets unfold in “real life”. We all know that losses can and do unfold, so there is no point hiding them. But what we have to understands is that losses are important, mainly because it is how you handle losses that will make you a better trader. A good example is on the 3min YM, here you would have had 3 valid losing -1R trades in a row, so yes you would have been -3R down. But then the TS4 sell towards the end of the day made +2.4R Profit (ignoring slippage and commission)..... In other words making up most of the earlier losses for you.
So you should have ended the day down just -0.6R. Now compare -0.6R loss to the big Profits form the last few days, and do you see why losses should not be worried about or ignored, they should just be kept small. By keeping them small it means that you are back in the black with only 1 or 2 trades, even after 3 losses on the trot.
This is one of the hardest thing new and Amateurs traders struggle with. They find it hard to deal with losses. They want to just avoid them, then after 1 or 2 losses they stop trading and therefore miss the next big winner. Losses should not be vied as a “mistake” or anything “wrong”, but just as a “business expense” and part of the cost of trading. They will be easier to deal with then......
Thanks, Steve
Yesterday was a good lesion in that losses can and do occur. Many Gurus will never mention losses, but they do not know how the markets unfold in “real life”. We all know that losses can and do unfold, so there is no point hiding them. But what we have to understands is that losses are important, mainly because it is how you handle losses that will make you a better trader. A good example is on the 3min YM, here you would have had 3 valid losing -1R trades in a row, so yes you would have been -3R down. But then the TS4 sell towards the end of the day made +2.4R Profit (ignoring slippage and commission)..... In other words making up most of the earlier losses for you.
So you should have ended the day down just -0.6R. Now compare -0.6R loss to the big Profits form the last few days, and do you see why losses should not be worried about or ignored, they should just be kept small. By keeping them small it means that you are back in the black with only 1 or 2 trades, even after 3 losses on the trot.
This is one of the hardest thing new and Amateurs traders struggle with. They find it hard to deal with losses. They want to just avoid them, then after 1 or 2 losses they stop trading and therefore miss the next big winner. Losses should not be vied as a “mistake” or anything “wrong”, but just as a “business expense” and part of the cost of trading. They will be easier to deal with then......
Thanks, Steve
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