Winning Trades and Losing Trades

 

Winning Trades are the by-product of Losing Trades

Too many traders have an obsession with Winning Trades.  I hate to be the bearer of bad news to some of you, but taking losses is the primary job description of a market speculator. If Losing Trades offend you or upset your emotional chemistry, if you consider “being wrong” to be a character fault or a “problem” with your trading approach, if you even think that the marketplace cares what you think or what you do, then market speculation is probably not for you. Trading is mostly an exercise of throwing mud against the wall to see what sticks – and most lumps of mud fall quickly to the floor. I have known many extremely profitable career traders over the years and very few of them have a win rate in excess of 50%. Almost to a person, these traders view taking losses (many losses) as the process of finding winners.

I am not offended by being wrong on a market call – it is absolutely not a big deal to me. It is always an amusement to me when tweeters go out of their way to remind me of bad market calls. To be a successful profit taker, a trader must first become good at taking losses. Sorry – both profits and losses are part of trading. I know of no other service similar to the Factor that provides a frank discussion of losing trades, losing days, losing weeks, losing months and even losing years (I have experienced several net losing years along the way). I am in no way embarrassed to be wrong on my market analysis or on trades.

If Losing Trades and being wrong bothers you then trading is not for you. If you become obsessed with Winning Trades and making money back in the same stock, forex pair or futures contract in which you lost capital, then you need to seriously examine if you should be involved in market speculation.