All Is Not Lost

Have you ever had those months where nothing went right? You lost time and time again and could not help but feel like a loser. In the back of your mind, you may have thought, "What good could have come of this? I just wasted my time." It's psychologically difficult to look on the bright side when you have lost so much, but you have a choice. You can feel defeated, pout, or get angry, or you can consider what past setbacks have taught you, make midcourse corrections and feel excited about future prospects. All is not lost. Why not turn a loss into a gain?

Professional athletes and seasoned traders know how to turn losses into gains. Rather than mull over past defeats, or trading losses, they use the setback as a motivator, an opportunity to hone their skills, grow, and improve. They examine what they did wrong, learn from their mistakes, and view the temporary setback as a fresh starting point from which to achieve higher future performance. Many successful athletes note that Babe Ruth struck out over 1000 times on his way to setting the homerun record. Seasoned traders similarly note that winning traders, with proper risk management, can win as few as four trades out of a dozen and still come out ahead. In both cases, these winners could have been bogged down with self-doubt, regret, and defeat. But instead of feeling stuck and beaten, they decided to use the "loss" as a motivator for change and improvement.

How can you make the best of a setback? First, identify what you did right and what you did wrong. Sometimes a trade goes wrong because you were in a bad mood. Perhaps you were stressed out or tried to risk too much money. Perhaps you didn't prepare far enough in advance for a trade. Maybe your trading approach was inappropriate for market conditions. Things may have not gone your way because you did not trade under optimal conditions. It's necessary, however, to identify those conditions where you trade at your best and to trade under those conditions. Second, don't be afraid to identify what you did wrong and admit it. The biggest obstacle to improving your trading approach is to deny you have limitations and to try to cover them up. We usually engage in such deceptions because we believe that we cannot overcome our limitations. If we have the courage to admit what we did wrong, however, we can be more open to change. Third, it's vital to be committed to making a change. You must be willing to do whatever it takes to change. Making a change is difficult, and if your heart isn't it in, you will find a variety of reasons to not change. In the end, you must make the decision to change in order to actually change. You cannot just think, "I would like to change or it would be advantages to change," but you must think, "I am determined to make a change." Finally, you must maintain optimism. You must believe that change is possible and that if you work hard enough, you will achieve the change you desire.

When searching for success as a trader, it's vital to continue to improve. You must pick yourself up after a setback. When your ego is hurt, you cannot wallow in self-pity. You must get up and fight. Losses are only setbacks if you think of them that way. Rather than see a loss as a tragedy, look at it as a stepping stone on the path to more profitable trading.