A word about losses…

Blog0 comments

Genuine day traders will undoubtedly experience losing trades and indeed losing runs of varying degrees. Losing trades are thus an inescapable part of successful day trading. Yes, you read that right – a successful day trader will experience losses as well as losing runs from time to time. The most important thing however is how a trader deals with them when they occur.

Once a trader accepts these inevitable losses the factors they should work to control are pretty straightforward. It is about focusing on a couple of key areas:

  • Money management
  • Trader psychology

Here are some simple rules to help us as traders deal with losses and losing runs more effectively:

Money Management

  • Risk less when you experience a run of losses
  • Cut back position size until you experience a run of successful trades again
  • Only start to risk more when you experience consecutive successful trades.

Trader Psychology

  • Never try to ‘get back’ losses by revenge trading (i.e. increasing position size or trading frequency) to compensate
  • Never try to make more than your losses back in the same day. If you cover your losses for that day GO OFF AND DO SOMETHING ELSE – BUT DO NOT TRADE AGAIN!

If you would like to learn about these principles and more, please click here to discover the potential benefits of taking our Pro-Trader course.

By Dave Newall

Dave has recently joined Wizard Capital Management as a proprietary trader and has a desk at our Manchester offices, a former medical advisor and Pro Trader Course delegate, Dave will be continuing to write articles about the new experiences of becoming a full time trader.

Leave a Reply

You must be logged in to post a comment.