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The pain of losing is something that many traders can not bear. When you get into 10 or 15 straight losses then the lack of risk management will knock a trader out of the game. Even if you have risk management in place many times the mental pain and anguish can not traders out of the game. The key is small losses that you realize are just part of the game. You can not control if your trade is a winner or loser no matter how hard you try. All you can do is go with the odds and let the market decide. Here is a checklist I learned to go over after the frustration of a loss that I believed would be a winner based on the chart action. Good traders are the ones that lose the best by losing the least when they are wrong.

  1. Did you enter your trade with in the parameters of your trading plan?
  2. Did you stop your loss at the price level you had planned to exit at?
  3. If it was a winning trade did you trail your stop where it was suppose to be to lock in profits and limit losses?
  4. Was the stock, commodity, future, or currency one that you were familiar with that was on your watch list?
  5. Did your position size account for volatility?
  6. Did you make the mistake of adding to a losing position?
  7. Did you write down any new rules based on something you learned about the market with this losing trade?
  8. Did you write down any new rules based on something you learned about yourself with this losing trade?
  9. If you had to do this trade again is there anything you would do differently?
  10. What made this a losing trade, you breaking your own rules or the market just not moving in your favor?

If your answers to these questions are all positive and you did everything right and still lost, then just put it behind you and move on. If you did something that caused the loss or made it much worse then do not repeat that mistake. Okay the trade was loser, so what, what’s next?