There is one common denominator in the outsized losses of my trading career.  We’re talking the double digit % losers that really hurt your chances of a big quarter or year.

First, here is a list of things it is NOT

  • It’s not fighting the trend
  • It’s not knife catching
  • It’s not trading 3x levered ETFs
  • It’s not chasing extended stocks
  • It’s not gambling on low volume penny stocks.
  • It’s not that I have gambling issues
  • It’s not that I have outside influences affecting my trading
  • It’s not that I was in a trading slump
  • It’s not that I have psychological issues

So many people want to just shove their way of thinking and doing things down your throat.  For these trading intellectuals, anything you do that goes against their core set of beliefs is wrong.

Ignore them.  They just want to sell you something OR they lack appropriate perspective.

The single biggest detractor I’ve faced in 8 years of trading is feeling the need for any single trade to work.  The feeling that THIS trade must win.

It’s pretty stupid when you think about it.  So why does it happen?  I can only answer for myself, but here’s what I think:

It’s a combination of a lack of confidence and/or fear.  It’s easy to lack confidence when you don’t have significant trading experience under your belt.  For years, I would get caught in that middle ground of ‘my initial stop has been violated, but I still like this idea’.  I would lack the strength to admit my idea wasn’t working and say to myself:  “You know what Aaron, you might be right in the end, but it isn’t working.  Your idea has been proven wrong and it’s time to move on”.

At the same time, holding a losing trade is a mechanism of fear.  Being afraid of taking a loss or being wrong or having of a losing streak.  At the end of the day, these things happen.  It’s truly silly to put these mental constraints on yourself.

Keep an eye out for this state of mind in your own trading.  It might unlock some trading growth for you