Well..., what exactly can one learn from their losing trades
I can take this question in a couple of different ways.
The first would simply be to assess if the trade we entered was within our plan. If it wasn't, then an internal audit needs to be made about why we are doing this. I do think for PA traders, there needs to be a bit of flexibility. Its not like an automated trader that can dig into the code and find out why the algo did what it did and fix it with better code. Us human traders probably work within a range actions that can be acceptable. (ie. You can greet someone with "good morning", "hello", "how is your day", and although one of these might be better suited for a particular situation, the fact that you are greeting someone in a warm and friendly way is good enough)
Now of course we also have to make sure that we aren't going down the wrong path and trying to figure out why the market turned when we weren't expecting it to. At some point, we have to give in to the fact that we are only trying to predict the future, and this will invariably be a game of probability. So if we expect to have at least 30% losses, we shouldn't lament too much on these losses if they occur within the expected distribution of trades.
But the other way I can take this question is if you are asking what can we learn about the market if our trades are losing. For example, if we are taking longs, as they set up for us, and the entry we are happy with, but if the long keeps failing, then what we are learning from the market is that it wants to go in the other direction. So in a way, the result of our losing trade helps set up our next trade.
A roulette wheel for example has the same chance of landing on any number, so one spin of the wheel doesn't help you figure out what the next number should be. And one losing bet doesn't teach you anything about the future. But if playing poker, I imagine that since we are able to count the cards, the more cards you see on the table really does help you with your next move. If there is a disproportionate amount of high number cards already visible, I would think there is an edge by taking into account that what is left in the deck are more lower number cards.
Likewise, if price enters an area of support and you try a long and it fails, but then you try another long as it sets up, and it fails again, then perhaps you can use these losses to guess that you should stop looking for long setups and instead find where to go short. Of course you can still be wrong on the short side as well, but when price hits a level and bounces off, and that bounce is clean, you wouldn't usually get stopped out. So the fact that your longs are stopping out could be an edge for where the market is going and hence your next trades could be higher probability trades.
