"Your losing trades do not diminish you as a person. You are not your losing trades. You are also not your winning trades either. They are simply by-products of the business that you're in."
I was so confident that CCME would continue higher on 1/28/2011. So I bought the stock near the close at $23.00 on 1/27/2011 and held overnight. The stock DID spike higher the next day. However, I was in a sleeping beauty mode and did not get a chance to take profit before the stock came crashing down. Hence, I turned a 1k profit trade into 2k losses. Below is the transaction:
5mins intraday chart:
I opened my platform and saw my account was down -$2,000 on my CCME position. Instead of spending my time crying about it, getting angry, frustrated and thinking about should have wake up early, could have set alarm clock, would have made 1k this morning...etc I clicked the sell button immediately and made a FFFFFUUU Comic then eventually move on looking for my next opportunity. Which leads to my ARAY trade, a nearly +$1,500 trade. Below is the transaction:
5mins intraday chart:
This is what we call accepting the RISK in trading. Unfortunately, I was unable to fully recover my losses of the day, but that's not my point. What was important is that my losing trade did not cause me to lose my self control, confidence, discipline and focus.
Many traders would define their risk(stop loss) and profit potential then place in a trade. However, when things did not turn out the way they wanted to be. Instead of accepting their risk/cutting loss and move on for the next opportunity. They waste their time complaining about the trade then become frustrated, angry, and emotional. Now, not only did they lose money on the trade, they also loss something that is very important to all successful traders, attitude. Believe me, losing your attitude is way worse than losing your money in a trade because that's when you start revenge trading, over trading...etc which leads you into a deeper hole, end up losing more money. So PLEASE!! NEVER, EVER make such mistakes.
Here are my suggestions whenever you encounter a losing trade:
1) Obey our stop loss - Sell it immediately and move on to the next trade.
2) Walk away - go for a walk, watch some TV or go take a dump if you have to.
3) Never add to your losing trade - Adding to a losing position would usually end up in bigger losses.
Good Luck Trading everyone and have a great weekend.