daytradingskills

Become a Graceful Loser

“If you personalize losses, you can't trade." – Bruce Kovner

Day trading is a game of statistics to begin with – your trading system has some average win/loss ratio. Well, no one minds winning, the problem is how to handle losses. But to many, there is something even darker than losing money; being wrong. You know how much importance is attached to success in our society, so you are probably success oriented. You always play to win. You or others expect you to always win. This is what we consider normal.

Learning the mechanics of trading is rather easy, but that is not sufficient to succeed. It is the proper attitude towards losses that separates successful from the rest. Reason is quite simple: losing is not only painful it can also undermine logic and performance.

Losing often triggers a set of negative emotions – frustration, anger, helplessness, loss of self worth, etc., which in turn degrade the quality of your trading actions. If left unchecked, the deterioration can feed off itself. Stating differently, emotions take over the reason and even a good trader begins to perform like a novice.

No one likes to lose or look like a loser, but that is an unavoidable part of trading life. No matter how well prepared a trader is, he is going to experience losses. Successful traders have learnt the art of “losing gracefully”. The question is how to become a good loser in a society which looks down upon the losers. Well, it can be done with proper training and reasoning. Once it is realized that the art of making money in trading paradoxically lies in learning the art of losing, the mental stigma of losing disappears. To guard against losing trading discipline, traders need a system of conditioned responses to losing that is normally possessed by most competitive individuals. For them, it is OK to lose; they have consciously trained their minds that losing is all right.

Successful traders know that correct attitude and state of mind are as important as having a good trading system. The ideal role model for traders is an emotionless robot which remains unaffected by inputs and outputs. However, being humans traders have to perform despite their human emotions.