As any other Business, Losses are part of trading , As a trader you are going to losses money and some point of time. Most of traders search for “Holy Grail” trading system which give them accuracy of 80-90%. Such system are advertised all over, Tip provider claim we give you 90% accuracy tips but all that is just a marketing gimmick. In reality no such system has exists or will exists. If you still think for Holy grail system or fall in trap of tip provider stop trading from today onwards and protect your hard earned money.
As cliché as it may sound, losing really is part of winning as a trader; the two are inseparable. If you don’t learn how to lose properly you will never make consistent money as a trader.
In reality all Professional traders loose money, Be it be Rakesh Jhunjhunwala or any leading FII’s, They understand that it’s just part of the “game”, but they make sure they have capital to live another day . Sadly, for many retail traders, every trade is accompanied by a tremendous FEAR of losing money.
Lets analyses why traders are fearful about losing money
1. Trades needs to understand you can loses a series of traders but you can still be profitable. Its simple maths, You can loses 10 trades with a SL of 0.5% but one trade if you gain 8% all your losses are covered and you entered into profit. But for that you need to have discipline and trust on your trading system.
2. They are trading positions that are too big (risking more than they really should be), causing fear, sleepless nights and huge emotional swings.Many traders as discussed on my facebook page will take huge and big positions in Options thinking of some rosy scenarios of doubling or tripling money in fortnight and in process losing substantial amount of their trading capital. One you had big loss you will always be in fear of losing money.
Fear of losing money is a good emotion to have in many areas of life, but in trading we need to trade with different mental state.
Instead of being fearful of losing your money when trading, trader should make sure that you have control of on your each and every trade. You should decide when you should enter,exit the trade not market. A trader has complete control over the risk management of every trade via stop losses and position sizing, as per his trading system. I have mentioned “Trading System” that’s the key to success of traders as trading system will make sure instead of being “fearful” about losing money, you should feel empowered and confident because you can predetermine how much you are comfortable with potentially losing BEFORE you enter a trade.
However, just using these tools to control your risk per trade is not quite enough to totally remove the fear of losing.
Answer the below 3 question honestly as their answers will determine Can you continue with trading.
1. Do I have edge to become a trader or I trade just because someone told me you can make big money in short time
If you’re trading your hard-earned money in the markets but you don’t know what your trading edge is and you don’t have 100% confidence in your ability to analyze and trade the markets…you probably should not be trading. One of the biggest reasons traders become afraid to lose their money is because they aren’t confident in their own ability to trade! As per my experience most of traders simply don’t have a trading strategy mastered, they don’t have a trading plan, trading journal and list goes on.
2.Do you have Risk management system, If Yes Are you trading a position size that’s too large
If you don’t know what your per-trade risk tolerance is, then you need to figure that out first. It’s basically just the amount that you feel like you are 100% comfortable with potentially losing on any trade; because you CAN lose on any trade remember that. You’ve got to think of yourself as a risk manager and as someone who is managing funds, rather than just a small-time guy trying to get lucky; your trading mindset will directly influence your trading results.
Answer the above question and you will come to know where you stand as trader.
To Conclude fear of losing can cause trader to think he might miss big move in market, they will keep guessing market top and bottom and eventually losing money. Conquering the fear of losing money and trades starts with acceptance; we have to first accept that we are going to lose money and have losing trades, even if we try to avoid them. Thus, there is no sense in “trying” to avoid losing trades, instead we have to learn to roll with them and contain them.
What you learn here should give you the power to eliminate your fear of losing money in the markets and will help you develop into a confident and emotionally collected trader.
To learn more about the above concepts and to get on the track to conquering your fear of losing money in the markets from professionals , checkout my Trading course .
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