Stop Losing Money Trading: Recover Your Account
In today’s article we will discuss how to recover trading losses.
Whether you’re just starting out or already trading successfully, you have most likely hit a stretch of losses, it might be a trade, it might a few trades, it might be a few weeks.
If you are down 15% or more of your account and you continue to lose in your trading; this is catered towards you, I want to help; I’ve been there before. You’re reading this from a guy who’s gone through that path, it took me an incredibly long time to start hitting consistent profit because some of the mistakes I was making psychologically.
The Path to Stop Losing Money
To recover from a trading loss you need to put together a structure to bounce back. One of my favorite quotes is by Winston Churchill, ‘’Success is the ability to go from one failure to another with no loss of enthusiasm’’. This is directly relevant to us as traders; there isn’t one successful person that I know who has not experienced failure.
In fact failure only occurs when you learn nothing from adversity. When you continue to do that which is not working, that’s failure. In trading this is no different; it’s OK to lose. We’re in a business where we take risk; that’s warranted in hopes of earning a reward. It’s OK to lose in fact it’s necessary to lose. It’s how you use that loss that defines your outcomes and character.
The 5 Steps to Stop Losing Money Trading
I’m going to go through and give you five steps to recover your trading account whether you’ve lost a little or a lot and you can’t seem to find your groove, if you’re in a funk and you want to bounce back; this is for you.
5 STEPS TO RECOVER YOUR TRADING ACCOUNT.
3) Make a plan
1) ACCEPT – The 5 Steps to Stop Losing Money Trading and Recover
Accept it; the future begins today and you can bounce back but accept that loss and you need to tell yourself right now; look at your account balance and say this is the result I’ve produce; I’m going to own it, I’m responsible for this loss but I’m not going to be the person that created that loss.
I’m going to be somebody new; this is my opportunity to recreate myself and seize the advantage of taking opportunity in the future. Another Winston Churchill quote that is phenomenal for traders, ‘’A pessimist sees the difficulty in every opportunity; while an optimist sees the opportunity and every difficulty’’.
Myself; I’ve been trading for twelve years. There are days where I get in a funk, I have negative days. What do I do? I look at the opportunity in that difficulty every single day at the end of the session, I review my trades. I record all my sessions and I ask myself I go back and if I have lost a trade would I do it again? If the answer to that is yes; that’s a good trade. If I did not follow my trade plan or my execution was early/late, then even if I won money, that is considered a bad trade.
If I followed the strategy, if I did everything I was supposed to do and lost the money, I’ll take that loss with a smile and say I’ll go get em in the next one because I trust myself and my system.
2) ANALYZE – The 5 Steps to Stop Losing Money Trading and Recover
What was the cause of your losses?
It still baffles me when traders reach out to me and say I’m losing money and I ask them what was the cause and they don’t know.
They’ll say, “I don’t know; I just can’t seem to win money, every trade goes against me that I get into.” There’s a reason for that.
Be honest with yourself; look within yourself. This is a business where you’re directly responsible for your results. Not many people are used to that kind of environment; not that many people are used to being evaluated on such a personal level.
We go to work and we create some kind of product on which our boss ranks our performance, but we are very rarely evaluated on a more personal level – and when we are it is in a “constructive way”. In trading if you do terrible you lose money; if you do great you make money. If it was your fault – you need to hav ea difficult conversation with yourself and not find ways to make an excuse and overlook what happened.
Analyze what you did; break it down to two separate things.
There are only two reasons losses occur in trading.
1) The Strategy
2) The Operator
You have to pinpoint which one of these two things has led to losses and you need to be brutally honest with yourself.
The truth hurts but the truth is the only way forward. If you’re not following your strategy or you don’t have a strategy then that’s the operator’s fault. If you have lack of discipline, if you can’t wait; if you get too emotional in trades; that’s you. Identify that; that’s so important to know and when you’re honest with yourself you can do something about it. If that’s you we have a way to help you through that; I can help you through that. TRADEPRO Academy was developed with you in mind.
If it’s your strategy, the good news is that is actually the easier of the two to correct.
If your strategy is broken, but you’re implementing it consistently; that’s phenomenal. The trader that is losing but following the rules consistently has a much better chance of success than the one that is making a lot of money without any form of structure. I would always back the first trader in proprietary trading, and would never hire the second.
Create a Journal and Analyze the Data
Without data you’re just another person with an opinion. The problem if you don’t have results to analyze is that you don’t know what you’re doing.
You can’t go back and say in all my losing trades this one recurring action was the common factor. And if all my winning trades this was a common factor. You need to have a journal so you can keep track of this data to go back and analyse. When you start journaling your trade activity you can find out what habits you need to cut and which ones you need to repeat. This is called reoccurring behavior analysis.
3) PLAN -The 5 Steps to Stop Losing Money Trading and Recover
Make a plan; it is scary to me how many traders do not have one.
This is not a business in which you can fly by the seat of your pants. You can go to a nine to five job and sleep through the day and still get paid. You cannot do that in trading, because a bad day can mean losing money – and that’s negative salary. How would you feel about a salary cut?
When making your trading plan and structure, there are a few questions you want to make sure it includes.
When will you get in?
When will you get out of a trade?
How much will you lose?
When will you move your risk?
When will you eliminate your risk?
Will you add to your risk?
How much could you lose in any single day and still trade?
How about a week?
What about a month?
There are a lot of variables that go into a plan. It’s not just getting into a trade, it’s getting out; that’s the important part.
It’s not just finding where price will go, it’s finding how to execute on that plan. Make a plan; test it; tweak it and then trade it live. Everyone wants to know from me where is gold going to go. What’s the market going to do? That’s not important.
I could tell you where it’s going to go and it doesn’t mean you’re going to make money. Picking location is one thing; executing is an entirely different thing. Have a plan and make sure you use it every day in the market.
‘’It takes as much energy to wish as it does to plan’’, I love this quote.
I hear things like “I wish I was successful; all these guys they’re more educated than me. This guy worked for Goldman Sachs he must be a better trader; he’s got a better data feed, his software is superior to mine. I wish I had all the stuff.”
Guess what? Forget about wishing; wishing is not how things get done. Have a plan and execute it, be strategic, this is the only way you will be successful.
4) ACTION – The 5 Steps to Stop Losing Money Trading and Recover
Now it’s time to take action. All steps are useless without this one. Action is where the rubber meets the road.
The great thing about having a strategy is that it creates confidence in yourself. Every trade that you place will be with purpose and a strategic reason. You will feel so much better by this point, trading will feel like a business, and not a random act of luck.
Commit to taking action. You’re not going to get paid in this business for an idea; you get paid in this business for execution. Trade your strategy and keep learning.
Remember – you’re always going to be a student of the markets. It’s when you start to get some consistency that you start to increase your size, you gain confidence and you start to think that you’re one step ahead of the market. You become more knowledgeable, you’ve out-witted it; you are the edge; the market listens to you. That’s when you’re one trade away from disaster. Always be a humble student, you’re in class in the market; you’re never going to be the teacher.
5) ABSORB – The 5 Steps to Stop Losing Money Trading and Recover
Don’t trade alone, isolated in a corner in your basement or spare bedroom.
You need to constantly seek to learn and absorb; be a sponge, become a part of a successful community of traders and absorb what they’re telling you; absorb what they’re doing.
Always look for things that other traders are doing that you may not be. Always see value in their system, seek to discover new things. It’s not something that you learn and that’s it, you’re off to the races, you’re a millionaire.
You always have to look for new and better ways; adapt, look and try to spot trends. Look for somebody who’s trading different products. Wouldn’t it help to know how bonds move for example? Absolutely! There’s a chance that when the bond guys are buying; you’ll be selling equities because they move inverse.
The more you surround yourself by people who are doing that which you hope to achieve the better trader that you become, the better person you become, the more accomplished you become, the more satisfying it is.
Join TRADEPRO Academy and trade with a group of professional traders in an interactive environment.
There’s a saying out there only about five per cent of traders that try it and that being successful. Why? Ninety five per cent didn’t have a plan.
That ninety five per cent had emotions that they were looking, willing to change or look past. Ninety five per cent don’t have a journal. That’s a part of the ninety five per cent the flake out; the five per cent of people that are successfully doing it don’t have anything more than you do.
I hate to break this you but successful traders don’t have anything more but discipline, perseverance and they have the ability to wake up every day and fight for every single dollar from the market.
I once had a friend say George you’re a pretty lucky guy. You get to just sit at home in your pajamas, sit on the computer all day and just make money. It’s that easy for you.
I said, you know what that’s a very ignorant statement. It is not easy, it is hard to constantly evaluate yourself; be true and honest with yourself. To be your own boss, you have to have complicated conversations with yourself. To sit yourself down and say you had a terrible day, what are you going to do about it? It’s one of the hardest things to battle your own psychology and every other business we have a boss breathing down our neck.
If you don’t like your boss today imagine you becoming your own boss and you don’t like that guy? What do you do about it? Leave your job? Not possible!
It is not easy but it’s achievable and the good news is to be part of that five per cent you have to know who that five per cent is and surround yourself with them.
TRADEPRO Academy is full of successful traders. I do this myself, I do this for a living.
I can teach you how to get that edge; how to structure a plan for yourself and how to put together an execution strategy to help you hit consistent profits and be successful.
You can also learn about our institutional grade day trading package here, or learn to trade a more passive options strategy in our package here.
Become our newest TRADEPRO, and join our community of elite traders.
The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.