Warrior Trading Blog

How The Pros Recover From 5 Figure Losses

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How The Pros Recover From 5 Figure Losses

Every pro trader has been there a few times. You do your routine analysis looking for potential trades. You identify a great trading opportunity. You do your due diligence to make sure that you are not missing some important detail. Then when it all checks out, you input your trade confident that you have made the right choice.

Then it all goes wrong…really wrong.

Traders face small losses, missed opportunities and bad timing every single day. However, major losses can make even the most seasoned veteran question everything that they think they know. Suddenly you are unsure about your choices, missing easy trades, trading when you are not confident and every other rookie mistake in the book.

Fortunately the pros have been through big trading losses enough times that they have developed a simple step by step system for clearing out the bad energy after a big loss, getting back on track and building their confidence back up to where it was before the loss.

Stop Trading!

You are mad, you are confused and maybe even a little hurt. Big trading losses are so dangerous because they knock you out of your essential trader’s cool and make you susceptible to all those emotions that you thought were long behind you: fear, doubt, anger and more.

The only way to stop this dangerous process from spiraling into even more bad trades is to just turn off your trading platform and step away from the computer. This clean break from your bad trade is essential to preserving your trader’s cool and getting back on track with successful trading.

Take Responsibility For Your Results

There may well have been a number of viable reasons why the bad trade was not your fault. However, at the end of the day you are the one who confirms your trades, and you need to take responsibility for the outcomes regardless of the outside factors involved.

Analyze the bad trade to see where you went wrong, what you can learn from it and what you can do better in the future. Traders learn far more from their mistakes than from their successes, so this is a great opportunity to further hone your trading skills and strategies. Perhaps this bad trade is a part of a bigger problem with your current trading strategies, which makes this a great opportunity to get ahead of the problem and make some important changes to how you trade.

Start Small & Gain Your Confidence Back

Once you have centered yourself emotionally and identified where you went wrong, it is time to get back in the saddle and start trading again. The key to getting back into your usual stride is to make a few smaller trades that you are very confident of and book some small profits that will provide you with the confidence that you need to start tackling bigger trades again.

This strategy of starting small is a product of how the human brain works, with the small rewards from a few good trades helping to clear any of the negative thoughts left over from your bad trade.

Final Thought

The trading pros know that big losses happen, and the only real danger that they represent is when you let them affect your subsequent trading. This simple step by step process is the tried and tested method for breaking the cycle of negative emotions after a bad trade and getting you back on the path to success.

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