Some Days Are Simply Losing Days
Don’t fight it.
If you’re going to trade, you will have losing days. I’ve been in the futures industry for over 15 years, and in that time, I’ve never met a trader who hasn’t had a losing day—and I never will. It’s impossible.
The key is to understand this reality and accept it.
One of the most important responsibilities of a day trader is making sure that a losing day does not turn into a disaster. Human nature works against us here. Our emotions and instincts are not naturally wired to handle losses well. We want to be right. We want to win back what we’ve lost.
However, one of the defining differences between successful traders and those who struggle to become traders is that successful traders learn how to lose. They understand that losses are part of the business. Traders who refuse to accept a losing day often make a series of costly mistakes in an attempt to avoid taking that loss.
They may hold positions overnight when they normally wouldn’t. They may reverse positions impulsively, add to losing trades, pyramid at the wrong time, or abandon their trading plan altogether. These are decisions they typically wouldn’t make on a normal day.
As a result, what should have been a manageable losing day—perhaps a $700 loss in a $10,000 account—can quickly spiral into a devastating drawdown, wiping out a large portion of the account, if not more.
That’s why it’s critical to maintain realistic expectations and understand the statistics of your own trading. Keep detailed records. Track your performance. Know your average winning days, losing days, drawdowns, and risk parameters.
Sometimes the most valuable lesson in trading is learning how to lose properly.
Because before you can truly excel at trading, you must first master the ability to accept and manage losses.
Tomorrow we will discuss on How to Better Manage Losing Days
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