What do you do after a losing trade?

[Woodrow97]

"What do you do after a losing trade?"

The same as what I do after a winning trade, nothing.

 

[smallfil]

Your math is off. If you risk 2% per trade, you do not add 2% as if you start over. So after five trades, you would be down less than 10%.

Second, I did not suggest not to analyze trading, and I am a big advocate for analyzing your data. But, I recommend having a macro view as opposed to analyzing each trade. The problem of analyzing each trade is you as a trader will fall into the "intuition" trap and will be prone to change your method which could be fine, but you tweaking it would make results worse.

Lastly, a trading journal purpose is not to analyze each trade. It is to gather more extensive statistics and detect anomalies in your trading that you would not be able to recognize intuitively. Examine something like https://optimusfutures.com/tradeblog/archives/edgwonk-trading-analysis-software-futures-traders

I analyze each trade and put notations on mistakes if any. Setups that just did not work do not count as a mistake. After a while, you see a pattern of the mistakes committed. That enables me to focus on those mistakes which have occured the greatest amount. Still, even individual trade mistakes can prove valuable if simple adjustments can be put in effect to enhance your trading performance.

 

[Zithiel89]

The best thing that any trader can do after making a loss is to take time to look back and see what went wrong, then get up and get going. It does not pay to brood over your situation and wallow in self pity, you'll just be more miserable and a miserable man never wins

 

[IamaMars]

After losing a trader, many people act differently since everyone naturally responds to loss in a different way. The difference between a loser and a winner is that the loser gives up after a poor trade and the winner looks at the missing links.Instead of being discouraged, it is best to pick yourself up and focus on the future rather than dwelling on the past

 

[smallfil]

The best thing that any trader can do after making a loss is to take time to look back and see what went wrong, then get up and get going. It does not pay to brood over your situation and wallow in self pity, you'll just be more miserable and a miserable man never wins

The point of reviewing losing trades is to learn from it. Top traders in Market Wizards will tell you that they learned the most from the mistakes. As the saying goes: "Those who do not learn from the lessons of the past, are doomed to repeat it."

 

[MattZ]

I analyze each trade and put notations on mistakes if any. Setups that just did not work do not count as a mistake. After a while, you see a pattern of the mistakes committed. That enables me to focus on those mistakes which have occured the greatest amount. Still, even individual trade mistakes can prove valuable if simple adjustments can be put in effect to enhance your trading performance.

I agree. A trade that did not go well, is not a mistake.

If analyzing each trade works for you, I understand and respect it. If it helps you build a long term pattern, then it's even better. The bottom line is that if you do things that help you improve your trades, you are in the right direction.

 

[ktmtrader]

Accept it as a loss and move on. However, you should be reviewing past trades to see if you made mistakes and avoid them in the future! Careless mistakes cost you monies! If you are less careless, you will have less losses and more monies!

Journal immediately after you close out a trade.
Do not look for another trade - you are too emotional right now (newbies only, not us veterans, who've been through the wars and have the scars to prove it.)

Treat trading like a science experiment - which it is - how did the experiment go?
Did you follow your rules to a T?
Did you enter and exit where you wanted?
Did you only risk 1% to 2% on your losing trade so you didn't lose your self confidence?
If you had followed your rules and method to a T - how much would you have made? This is super important review this, study it.

Move on, it's only one trade, a small hit to your equity - a non event. If you want to dwell on it, if you want to tell yourself stories, if you want your negative beliefs about yourself to take over that is your choice. Most of us that have made it do not do this - we used to, but not anymore.

You see the market does not know you exist, it knows nothing about your entries and exits, it knows nothing about when you are going to exit to profit or take a loss, so why are you having a conversation in your head about what the market is doing?

Only follow your rules. I hope you have an Edge.

 

[Trader Curt]

The one prime question you should ask yourself after ANY trade,winning or losing, is did you follow your trading plan fully with no deviations?

I agree with this. But I also think you should be responsive to any sudden changes. And this can be really difficult because with all these issues like these big timers triggering peoples stop losses, it can be a battle to judge when to hold and when to call it a loss.

Same as being turned down by a girl, hit the next one. One bus leaves, another comes in

The funny thing is, I've noticed trading psycology goes hand in hand in dealing with women lol

The best thing that any trader can do after making a loss is to take time to look back and see what went wrong, then get up and get going. It does not pay to brood over your situation and wallow in self pity, you'll just be more miserable and a miserable man never wins

A miserable man never wins ANYTHING in life

I agree. A trade that did not go well, is not a mistake.

If analyzing each trade works for you, I understand and respect it. If it helps you build a long term pattern, then it's even better. The bottom line is that if you do things that help you improve your trades, you are in the right direction.

Yeah something I've realized is that not all losing trades that I think is a "losing trade" is not always a losing trade. Sometimes what we define as losing, may not really be losing. Because i am realizing right now that just because I have not made 100,000 this year doesn't mean I'm losing. I mean it can, but I'm realizing it's more important to be a skilled trader than it is to be a profitable. If that makes any sense.

Journal immediately after you close out a trade.
Do not look for another trade - you are too emotional right now (newbies only, not us veterans, who've been through the wars and have the scars to prove it.)

Treat trading like a science experiment - which it is - how did the experiment go?
Did you follow your rules to a T?
Did you enter and exit where you wanted?
Did you only risk 1% to 2% on your losing trade so you didn't lose your self confidence?
If you had followed your rules and method to a T - how much would you have made? This is super important review this, study it.

Move on, it's only one trade, a small hit to your equity - a non event. If you want to dwell on it, if you want to tell yourself stories, if you want your negative beliefs about yourself to take over that is your choice. Most of us that have made it do not do this - we used to, but not anymore.

You see the market does not know you exist, it knows nothing about your entries and exits, it knows nothing about when you are going to exit to profit or take a loss, so why are you having a conversation in your head about what the market is doing?

Only follow your rules. I hope you have an Edge.

Yeah i'm learning right now how to deal with my emotions. And I'm realizing more and more that this is a bigger problem then I anticipated. I'm also realizing that dealing with my emotions has a lot to do with other things in life besides trading and that everything you do in life can affect your trading. It's a very dark and narrow path to follow...

 

[MattZ]

Yeah something I've realized is that not all losing trades that I think is a "losing trade" is not always a losing trade. Sometimes what we define as losing, may not really be losing. Because i am realizing right now that just because I have not made 100,000 this year doesn't mean I'm losing. I mean it can, but I'm realizing it's more important to be a skilled trader than it is to be a profitable. If that makes any sense.

A losing trade is a losing trade. But one trade does mean your trading method is terrible. Losing trades can occur as a result of a myriad of reasons, and as I said one trade should or even 5 for that matter should be the cause to rewrite an entire method. Series of adverse events and good events could happen.

I have no idea what you mean by being skilled over profitable? Your skills are reflected in your P&L when it comes to trading. Your goal is to refine your skills, but the end result it's your bottom line that matters . You improve the process to be ahead, and that is the real challenge, in my opinion, is the "refinement".

I do not downplay the psychological issues that occur during the trading process, but I can also tell that many “psychological” problems are just a facade for lack of adequately applied, correct knowledge, and confidence in decision making.

 

[padutrader]

they say losses are unavoidable in trading and for years i believed them.

If you believe them, then you will continue to lose.

Markets move because of market realities,realities which can be discerned from the market action in front of you.
i know this will not help you practically to make money .

but i can assure you that all the millions of gurus who advocate risk reward strategies are misunderstanding markets.
Markets do not play with dice