Dealing With Losing Trades

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Very disappointing trade that one.  The overnight market dropped like a stone.  The Nasdaq trade was actually briefly in profit yesterday, however, it was such a steep fall last night that it was one of the biggest overnight drops I have experienced in Nasdaq futures, not unheard of but brutal just the same.  At the end of the day, despite being disappointed, I must accept that this is a losing trade, and in system development, there will be many.  This happens to be the largest loss I have experienced this year, but I basically made the same amount on the last trade, so while I am disappointed to give it back, sometimes I have to accept that perhaps it wasn’t mine to begin with!

Risk management and capital preservation is the number one consideration.  The system is right about 60% of the time, and my edge is that my winners are on average 2.5x my losses.   I, and anyone who follows me, are still ahead considerably for the year, but risk management comes first, and the system told me to exit this fall and so I have, without question, without thinking about it.  I know I will be trading a long time and these last two trades will one day be a blip in a back-test, and a lesson in a seminar, about why taking every trade is important.  It doesn’t feel that way today though, so I wanted to send out a note to everyone to let you know that I feel your pain, but it will recover.  It always has.

Let’s see what the next trade brings, we are back to being oversold and there will be a bottom soon.

Anyone who has attended our Power Up Your Investing course will remember that losses are part of the game.  Time to dust off and keep playing!


2 Responses to “Dealing With Losing Trades”

  1. Paul Panesar

    Well said Captain John. Come what may with the storms, there will be no mutiny on this ship. We are sailing to paradise with weather proof sails.

    • John Bannan

      Batten down the hatches for a few days! For every loss we are closer to a bigger winner! Thanks Paul!


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