Can you handle a trading loss? Any trader who is serious about trading options for income over the long-term has to be comfortable with losses. It’s part of the game, states Bob Lang of Explosive Options.
Losing Is Part of the Game
Mentally, you are probably far more prepared to win than lose. That’s natural. Winning is why we trade, after all. You feel bold after a string of wins and invincible when a perceived loss turns into a big win.
Yet the inability to handle a trading loss can lead to disastrous consequences. The more you trade, and the more plays you make, the more vulnerable your capital becomes. If you don’t know how and when to take losses and bounce back, you could find yourself paralyzed, unable to make a trade, as you sit on the sidelines.
Losing is not fun, but letting it get to you is worse. I know of traders who hide from losses, make excuses, or deny the loss ever happened. That kind of mindset is dangerous. Traders in denial believe they have the will to push the markets around and make them bend to their own desires. The market gods destroy these players, slowly but surely. The markets don’t care what you think, or what you want.
How to Handle a Trading Loss
Handling a loss in trading is no different from handling a loss in sports. Accept the loss, study what went wrong, and make adjustments to get back on the winning track. I find it helpful to dissect a losing trade. Why did the trade fail? What could I have done differently? I write all of it down in a notebook, which I study from time to time. This is one of the best ways to improve as a trader.
Once you analyze the trade, the next step is making a new trade. Jumping back into the game is just the tonic I need to right the ship. Many traders get into a slump; I’ve been in many of them myself. Don’t let fear hold you back. Take the next trade. Who knows – you could hit a monster winner.
Learn more about Bob Lang at ExplosiveOptions.net.
