What’s The Matter With Losing Trades?
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When you have an awesome run it is easy to feel like you can take on the world and that you are headed for financial success and that nothing can hold you back. But what about those months that you end up feeling as though you worked harder than ever and yet barely broke even or even lost some ground? Those months seem endless and the seem like foretelling precautionary events that you might be headed for financial failure and could even be facing homelessness, starvation, and all the other associations we make with losing our shirts. However, these scenarios we simply create in our mind. In some cases, we create these fearful scenarios in order to motivate ourselves to come out of a really tight month with more conviction to do better with every following step.
Your reaction to a month of really tight profits, barely there trades, and seemingly endless losses may very well be determined by your expectations of either the market or yourself. If you are reacting by taking it in stride and determining where you can learn more and where you simply encountered a little bad luck and unforeseen events then you are looking at the market as a non entity and looking at yourself without judgment. If you are deciding that the market is responsible for your tight month, then you are creating your own victimization of the market. Since the market is a non-entity, it can not possibly be responsible for the losses you achieved.
Of course, you could always blame yourself. Blaming yourself is an exercise in self judgment. While many of us think that judging ourselves rather harshly creates the expectation that we will do better, in many cases it has the opposite effect. When you are telling yourself things such as “I am a loser,” or “I wasn’t on top of things this month,” or “Maybe I am not smart enough to trade,” you generally aren’t feeling very good, confident, or ready to continue with trading. Instead you probably feel a bit defeated and maybe even like a hopeless case. These feelings do not produce more productivity.
The loss of money is a subject that most of us have a really hard time contemplating. Accepting the loss of money as a lesson or as a method of a higher plane of self education is also very difficult. The concept of losing money often leads to thoughts of self doubt. We live in a world where those who lose money are considered to be “flighty.” Being flighty implies that you did not do your very best to bring yourself to a place of profitability. This really isn’t accurate.
Sometimes our decisions directly affect our bank account and sometimes things that are completely out of control affect our bank account. Just because we didn’t pick up these events that are out of our control before we invested doesn’t mean that we didn’t go through every reasonable effort to make sure we were making the best decision possible. Allowing our thoughts, feelings, and genuine emotional reactions to indicate our next step prevents us from making the next best decision which ultimately bring us to breaking even or living with profit.
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