Winning and Loosing Lies With The Traders Not The Trades

Wins and Losses are familiar to us all, the pain of loss and the joy of a win. There is no confusion there.

However in considering the loss of a trade, the strategy is usually sound, it is the trader that came up short.

Well, yes there is a good chance this described you. In this article I will talk about ways to change all that. Your stop loss order is a really good place to start, this should be decided before you place an order.

No discussion of position entry is complete without a thorough explanation of stops. But I’m left to wonder why so few investors use stop-losses. If you’re guilty of not using stops, you need this information. It might just mean the difference between retiring on time with a healthy nest egg or retiring later and still just “scraping by.”

By planning and placing stops you plan to win, but prepare to take losses and still live to trade another day. So we need to look at the trader psychology around taking losses.

All professional traders understand they must know where they are getting out before they get in. They have to know ahead of time what a wrong trade looks like so they can exit it quickly. This is a rudimentary fundamental that EVERY professional trader knows the answer to.

What are the answers to these questions?

1.) When should you stay on board and when should you bail out?

2.) Is there a set point that indicated to you to sell losing stocks?

3.) Do you have a rule of when to move your stop to break-even?

If the answers to these questions elude you, you are not unique. What it says though, is that you need to get some regulations set for yourself, particularly when going to short stocks. But these trading rules won’t amount to a hill of beans if they aren’t used. If you aren’t using them you need discover why it is you don’t manage your risks in a professional and non passive style.

Many investors refuse to take a loss for two basic reasons:

1. They can’t admit they’re wrong.

Though not really avoidable, a loss is seen as a personal failure. This is a painful thing to admit for a large portion of traders, like it illustrates failure at life. It also takes away from their positive self image.

They personalize the loss and experience emotional pain. Many traders prefer to remain in denial instead of acknowledging their losses are causing them pain. This type of trader often has to lose it all before he begins to change (or gives up trading).

2. Taking that large of a hit would damage their portfolio greater than it can recover from.

Losses aren’t just on paper, they are real. The loss is what it is and the quoted price is it’s value.

Both of these examples are a form of self-delusion that millions of investors, both large and small, suffer from. Just look at AIG, Merrill Lynch, WAMU, Lehman, etc. … and you can take comfort in the fact that self-delusion is no respecter of income bracket or social standing.

Are you feeling uncomfortable with what I am saying?… or powerless, or angry? Good! That is a sign that you are capable of making the changes you need to.

Winning and losing traders have a different view of the pain from a loss, winners don’t take it personally. They look at the loss and see that they need to change their approach or execution not that they are personally flawed.

A winning trader distinguishes himself from what he does. They are aware that their worth as a human being is not linked to their skill at trading, but that they will need to increase their skill and experience to improve their approach and execution. They use the pain they feel to motivate themselves and increase their drive to be a better trader.

Both are learned responses and within your control. The opportunity for growth from the pain of losses is the same. It’s what we do with the emotional pain of a loss that matters, not the loss itself.

Stay true to my tried and true ETF Trend Trading System and develop the habits of a winner. Apply yourself, ask questions, and observe your position size as it relates to your portfolio and your trading trends will move to the winning side.

My constant reminders about proper stops and risks are one of the strongest parts of my one year mentorship program. Even after you understand my system 100%, it’s still good to hear me tell you, “Don’t move your stop” or “Be sure to take profits when the system says to, not too early and not too late.” Most my students like the mentorship part as much or even more than the course itself.

Learn how it’s very possible to make 6% per month in your investment accounts using etf trend trading! “Big A” is a recognized expert in the world of etf trend trading system & reveals etf secrets that have been kept under wraps by hedge traders for years. Give him your email & get a free report & webinar today!