Techniques to Stop the Chain of Trade Losses
The stock market, you could say, is an emotional game. Whenever you win trades and earn a lot of profit, you feel proud and happy about yourself, especially on your achievement and on what you did in getting your desired traded options prices.
However, because it is also something predictable, the stock market can invariably hurt the hearts of others. Here’s a known fact that some traders often overlook: winning trades in the stock market is never a guarantee. In other words, you do not win all the time because of how volatile the market is.
That being said, I still hear a lot of horror stories about people seem unwilling to break the chain of losses. Let me ask you a question: if you’re lost in the jungle, what do you do? Do you continue moving forward in the hopes that you will find the exit or do you immediately backtrack so that you can escape?
The logical answer would be the latter, right? I mean, it is not a good idea to move forward, especially when you do not know what is ahead. It is much simpler to go back to where you came from so that you can safely get back home.
So in the context of the stock market, what do people do if they lose more than 2 trades? Sadly, the answer is they keep on trading.
The problem is that when they keep on trading even though they’ve lost 2-3 trades straight, their decision-making is not anymore based on logic, but rather on emotion.
Is There a Way to Stop This?
There is actually a way for you to stop this seemingly endless cycle of trade losses. And the answer is not really too hard if you just use your head. Do you want to know the secret? Well, it actually is…
Really simple, right? The best way to stop the chain of trade losses is to, well, simply stop trading. But no, I do not mean that you quit trading; I just simply said that you stop trading, at least, for now.
When a war general senses that they can never win the war, a good general would keep his troops by retreating for now, regroup, create a new strategy, and then go to war again.
The same is true in trading. If you’ve lost more times than you can count and you’ve lost in succession, then it is best that you stop trading, regroup, reassess, plan again, strategize again, then trade onward.
Remember, quitters never win, but this is not to say that you cannot stop for a while, pause, and recuperate.
Marty Schwartz, a famous trader that came up with a book about stock market trading, said that something to the extent of “You have to pass through Neutral before you can go Forward.”
Final words: if you kept on losing for more than 2 times, stop, pause, and recuperate. Never ever move forward from losing in succession because from then on, you’re making decisions based on emotions and we all know what that will cause you.