A frequent mistake most of trader do is to focus on making money. If a trader is not profitable which 0% of traders are , the primary focus must be to first stop the bleeding.
I know we all come to trading with ideas of making money, and of course, that is the goal, but along the trading journey too many traders get caught up in the wrong type of thinking. I receive numerous emails from traders who tell me about their struggles, and one of the most common themes is the trader who has a good run and then gives it all back, or more, very quickly.In One Email a Guy made 58 lakhs in 3 months and lost all in 1 week in Aug 2015 market correction.
While I don’t know the details of each trader’s circumstances, I can infer that a common characteristic may be difficulty accepting a loss, while it is still a small loss, especially after a good run. It’s very easy to become stubborn, or overly rigid in expectations when our confidence swells up as our trading Profit increases and sometime rise abnormally in the last phase of Bull or Bear market and when you are on the right side of TREND. The market has a way of teaching a lesson to those who think they have progressed to the next level, or reached a new permanent plateau after a windfall or good run.
As the account swells, so does the ego; or the dream of easy money takes hold. And for those who are able to manage ego and keep it in check, complacency may be the danger.
Along my own trading journey, as well as watching others, it became abundantly clear to me and I emphasize a lot during my Training Session that one must “learn” how to lose before they can win over time. Many of my students feel akward hearing I should Learn to Lose to be successful but over a period of time they understand this golden rule. Trading requires a mind-set or way of thinking that most are unwilling to consider.