Traders will typically approach a large loss in one of two ways. First is the dumb way, and that is to become a petulant whiner and throw a fit. Next is the more-constructive way, and that is to use the loss as a means of developing as a trader and to “quote” — learn from your mistakes. But there is a third way. And that is to view the loss as the cost of information.
I don’t mean the cost of doing business per se. This is not typically associated with large losses. Small losses, yes. Because to make money you have to lose some along the way, as casinos do every day. And not the cost of tuition where the market charges a fee to school us. No, I mean information.
Instead of asking yourself about where you placed your stops and getting all personal about the whole thing, ask yourself what happened. Why did the market move the way it did? If you haven’t suffered a capital depletion, you are not likely to demand an answer and more likely to throw off the question with a wave of the hand and a shrug. “Who knows, who cares. I only play odds.”
Markets are a beast and if you want to play with them, you’ll have to be careful. Wear protective goggles and gloves. If you want to tame them though, you’ll need to wrestle with them. And sometimes you lose some body parts along the way.
1) the recognition that our thinking and our emotions are intertwined and both influence our perception and judgment that leads to our decisions and actions (this view also happens to be consistent what the leading brain scientists are now saying)
The one thing that is at the core of every person’s trading, no matter what tools are utilized, is a human being. The Professional Traders recognize that being is the start of the entire process, who they are as people, as traders. By focusing on yourself first and then on the rest, you address the core of your trading business. Just like every sports team looks up to its coach for direction or like a company looking up to its CEO for direction the results of your trading all begin and end with you as you are the captain of your own ship. It is you, the human being, making all the decisions about trading like what to trade, when to trade, what resources to use, what strategy to use, the knowledge you will acquire, who to listen to and so on. Professional Traders develop and maintain a very high quality of being. Being is more important than doing. If you are fatigued or stressed, your judgment can be impaired. If you are naive or ignorant you are more likely going to make mistakes. If you are anxious or scared you will not be able to think clearly as you would when relaxed. If you are emotional in trading you will see losses in your account. No matter what you do if you are not at 100% of what you should be you will not the results you wish for. 