December 15, 2009 at 1:48 pm | | Comments 6

How to Lose Like a Winner

I recently heard that in relationships, you can be happier if you choose to accept the whole person.  The idea is that instead of trying to weigh everything you like vs. everything you dislike, accepting them as generally positive is a better decision. Thankfully, my wife does that for me, looking beyond my numerous flaws and allowing my positives to overshadow them.

If you stop to think about it, this is a pretty good way to measure everything and everyone in our lives.  Staying objective about ‘it’ lets you recognize that overall it’s a positive thing.lose-like-a-winner

The successful trader is no different.  He looks at his overall trading operations for a given timeframe, and if the profits are there, then the mission was accomplished.

That’s not always an easy thing to do.  In fact, I’d suggest that your inability to view your trading in that general light could put you in the popular camp of those who can’t cut it in this game.  It’s much more natural to allow specific trades to stand out and influence our line of thinking.  It can result in a directional bias, a pet stock, or a slew of other closed-minded patterns of thinking – all of which can lead to the destruction of one’s account.

What we want to do is to win.  And if winning is defined as overall profitability, then winning will involve some losses along the way.  You and I have to be able to lose like winners!

Here are 4 ways you can do that:

1.  Allow no single trade to define your trading. Dwell on it for a short time if you must, but then move past it whether it was a big win or a disappointing loss.  You might have put a lot of preparation, concentration, and capital into that one great idea, but it’s over now.  Either pat yourself on the back for a trade well done, or brush yourself off and get back on your feet.  Think about how you can use it to your advantage.  Maybe you fattened your account with the profits from it, or expanded your comfort zone because of it.  Great.  Get back on your horse.

2. Win the war, not every battle. Put on individual trades which have sensible risk/reward, but place emphasis on your overall operations rather than each individual effort.  Basically, see the forest and not just the trees!  Accept that there will be some some losing trades, perhaps frequently, depending on your timeframe, and aim to overcome them with larger or more frequent winners.  The point of taking this step is not to go to battle with every trade due to the mindset of having to be correct.  Accept it when you are wrong, and no single ‘battle’ will ever sink your ship.

3. Cast fear aside. Fear is arguably our biggest enemy in trading.  It can cripple you if you allow it.  This is manifested in ways like trading so small that a win or loss has virtually no impact, or maintaining stops so tight that the stock isn’t able to fluctuate naturally without shaking you out.  Those who spiral down the drain of losing are often times gripped by fear.  Don’t allow that to be you.  Maintain a healthy respect for the market, but don’t be afraid of it.

4. Learn from every loss. You’ve paid the tuition, so you might as well get the lesson!  This makes a loss something you can still gain from, and every winner does it.  Always seek out ways to increase your trading knowledge, whether through specific education like a stock trading course or simply picking up on subtle behaviors in price action that are starting to surface.  Is the market starting to change, or are you refusing to avoid methods which aren’t paying off?  Keep an open mind, always look for the lesson, and let the long-term losers be the stubborn ones.

Lose like a winner this week, and you’ll have more to show for it.

Thanks for stopping by and I’ll see you here soon with more. Until then…

Trade Like a Bandit!

Jeff White

Are you following me on Twitter yet?

RSSComments: 3  |  Post a Comment  |  Trackback URL

  1. Hi Jeff: great post, every word in your article is true. That is actually the secret of my successful swing trading. In fact my formula is to have atlease 60% winners which will give you 20% lead. Minimizing your losses and let the winner run for itself is the name of the game. Again thanks for the great post.

    Aleem Khan

  2. Great post Jeff! I like what you said about fear. Sometimes I get in too late into a trade because I think… what if I’m wrong? What I’ve found is that I am right more often than wrong and that I just need to trust my research and set my stops before I get into the trade. That way if I am wrong, I limit my losses and move to the next winner.

    Thanks for your posts!

  3. Hey John,

    Good to see ya!

    You bring forth some great points regarding trusting in our analysis. It’s not like we have to trust that every trade will be a winner, but that our overall process will deliver success when we stick with it over time. Nice reminder for that next trade that doesn’t instantly do what we think it will!

    Thank you for stopping by and here’s to a great 2010!

Trackbacks: 3  |  Trackback URL

  1. From Selective Memory | on May 26, 2010
  2. From Flip Your Fears | on May 26, 2011
  3. From Are You Willing to Lose, Part 1 | on Jun 1, 2011

Sorry, comments for this entry are closed at this time.