!n today’s episode we are going to be discussing how to handle trading losses like a winner because at the end of the day, it’s not about how much money you make but how much money you can keep, and if you can’t take a loss then sooner or later you will take the mother of all losses. 

Why Traders Have Such a Hard Time Taking Losses

  • As a society, we are conditioned to aim for a high percentage success rate
  • A lot of us judge our self-worth on how often we are right which makes it difficult to accept being wrong and taking a loss 
  • Fear is a stronger emotion than greed; when faced with the potential of taking a loss, we will usually gamble and lose much more instead of accepting the loss for what it is 
  • Trading losses are guaranteed, but newer traders are often surprised when they happen
  • Few traders focus on risk before reward so when they place a trade they focus on potential profits and are not expecting to take a stop; placing a trade is not accepting risk, placing a trade is taking the risk

Learning to Take a Loss 

  • Your beliefs and attitudes about what a loss means will have the biggest impact on you 
  • If you take a loss personally and believe it affects your self-worth, then you will naturally have a difficult time taking a loss 
  • A perfectionist trader will often see a loss as a failure and setback which makes taking any kind of loss a real challenge emotionally 
  • Taking losses is not something that we enjoy but we have to accept the fact that losses are part of trading 
  • Once you can accept this fact then you will be able to release the fear around it 

Practical Strategies to Handle Losses Like a Winner 

Build and refine a trading plan & strategy

  • Before a trader can accept losses, they must be able to believe that they can produce profits, otherwise, each loss will seem like a roller coaster of emotions between life and death
  • The only way to believe that a trading plan can produce profits is to test it in the markets and to build a track record; when there is a track record of success then the trader will understand that result of any individual trade means very little
  • Without a track record, trading losses take on a much bigger meaning 

Reframe your beliefs about losses 

  • Losses are part in parcel of trading; the first step to handling them like a winner is to accept that challenges and setbacks are part of achieving anything worthwhile 
  • Be grateful for the loss 

Keep the bigger picture in mind 

  • Remember that the result of any individual trade you take is irrelevant to the big picture 
  • If you take 1000 trades over the course of a year, how important is a single loss in the overall context of things? Not very important! 
  • If you detach yourself from the result and see a loss as a simple data point – something to learn from – then you will have an easier time accepting a loss for what it is 

Evaluate your losses like a professional risk manager

  • Create a persona for when you are reviewing your trades at the end of the day when you will be grading your execution of the plan 
  • Imagine being a risk manager that is standing over your shoulder as you replay and evaluate your losses
  • This can remove the “emotional” connection to the event so that you can focus on evaluating and identifying the key areas of improvement going forward

Develop a routine after you take a loss 

  • Take a moment to journal the trade immediately and reflect on how well or poorly you followed your process 
  • Take a moment to give gratitude to the markets for the learning opportunity 
  • You can give yourself a timer to stay out for a certain amount of time
  • Take a deep breath, identify your next best trade, and fight back!

Keep on Learning 

  • Ask yourself; What have I learned from that experience? How will I use it to make me a better trader? 
  • See the implementation of the learning from the loss as an investment in your future trading career 


Leave a Reply

Trader Development Programs

Join our community and take your trading to the next level with one of our monthly subscription packages.  Learn how to swing trade stocks and options, day trade futures like a pro or get both in the ELITE monthly membership.   Start today, and trade with the professionals.

Close Menu