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Learning from losses

Winners learn more from losses than from profits. When a profit is taken, there may be little room for improvement. When a loss is taken, a trader's self-discipline is the first thing to be examined. The second aspect of a loss is how did the actual price action cause the loss? Was there a trend reversal; an unexpected gap? Most beginning traders sustain losses due to emotional reactions. Traders should ask these questions: How could I have improved the trading results on this trade? What did I do right? What did I do wrong? What were the technical reasons for entering and exiting this trade? Lessons learned from a loss are the price of knowledge gained. It is for purposes of learning that a trader must learn to plan. Comparing actual actions and results with a trading plan will highlight where the trader went wrong.



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Wednesday, 29 March 2023

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.