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Anticipation Regarding Losses

Trading is a business where you expect to see more losing trades than winners. Expecting to win is apt to produce more disappointment than joy.

That doesn’t mean you won’t have a high percentage of winning trades, but it is safer to anticipate otherwise. To the beginning trader, especially, this fact of life can be stress producing and somewhat disappointing.

How you cope with losses is all a matter of your expectations, the outcomes you anticipate. There are many professions where there frequent setbacks. Without the proper mindset, setbacks can be paralyzing. As a trader, it's important to have the right mindset. Rather than assuming that you can make easy money by putting on a few trades, it's better to be realistic.

It has been my experience that it can take a great deal of studying the markets if you want to find good trading opportunities. They are out there, but you have to do the grunt-work needed to find them. And when you find them, and try to capitalize on them, they won't always produce a win. That doesn't mean you should be disappointed. If you realistically anticipate setbacks, you won't be caught off guard psychologically. If you expect that you will lose on some of your trades, you'll be able to accept those losses more easily and you'll be on your guard against allowing them to become serious losses. You will be careful to control risk, so losses won't destroy your trading account. Don't let a series of losing trades take upset you. Just stop trading until you figure out what is wrong. If you enter trades with the assumption that you may lose many of them, you'll be able to recover from losses, make new profitable trades, and come out ahead in the long run.


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Sunday, 21 April 2024

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.