Accepting Losses With Grace
The lack of a proper trading plan which includes precise rules for entering and exiting a trade will most certainly guarantee failure over the long term. Beginners usually suffer from the same common ailments. They abandon trading plans purely on impulse because things are not going exactly as how they had envisioned. Repeatedly they use unreliable methods that fail to produce a profit. Many traders hold on to losing positions telling themselves “it is going to turn” when every indicator says otherwise because they cannot bear the thought of a loss.
Why do they torture themselves? Why don’t they just identify what’s going wrong and make a change? For some people recognizing that a trade or even a trading method is not working and making a change is easy, but for others it’s very difficult. They have to look at their limitations admit that they have made a mistake and that’s hard because it hurts our ego. Psychologically it’s risky, it’s often easier to fool ourselves. Just keep going, living in a state of denial until your account is depleted. If you recognize any of these traits in yourself you must stop trading immediately.
Take a good look at what has been happening, try and identify the problem. If you look close enough you may see a pattern. This is why it is vital to record every trade and as much information about it as possible. You have to break out of old patterns and see things in a new light.
Tags: Trading, Trading Plan