Receiving Losses: The Beginning of Success in Trading
One thing that can not be avoided when we are trading is experiencing the name of loss. Many new traders in this trading world strive to avoid loss and they try to set the wrong position in hopes that the position will return to profit or at least BEP. Instead of being able to avoid losses from positions that have been clearly wrong, just the losses suffered will grow larger. Even the worst thing, equity or capital will be eroded out.
In trading, our success does not depend on how good the trading system we have. If we can not manage every risk from the position we take, then do not expect us to make a profit consistently. We must study the harm or risk that can arise before we learn how we will profit.
Points to be aware of is that no one can be sure of the future. But that does not mean we can not learn the behavior of the market through price movements. Millions of traders in the world do this every day, as well as even banks and hedge fund companies. Well, in doing the analysis we must have a basis. Likewise, any analysis we do will not always be true and we should be able to take steps if our analysis is wrong.
The right attitude that we must take is to realize that our analysis is wrong and we must admit it. The thing to do when we have done the transaction is to close the obviously wrong position. It is hard to accept the fact that our analysis is wrong and the position we take against the market. Precisely in most cases when we face situations like this, the thing that is done is to increase the position again even against the market direction. That is the human nature that has a high ego.
How often do we profit is not the most important thing?
For example in 10 times our transactions profit 8 times and only loss 2 times, but not necessarily overall we profit. nature of trading is important not how often we profit but how much profit we earn and how small the losses we experience.
That's the point. When we are trading is not determined by how often we trade but how much profit we earn. In a sense, when we experience losses will not erase the benefits we have gained before.
In conclusion, when we trade must remember the concept of "maximize your profits and minimize your losses". Of course, this is not an easy thing to do but it is also not impossible as long as we are disciplined and know that trading is a business that has risks like the business in general. Trading is not a "holy grail" or a quick way to be a billionaire.