|Every trader will experience costly and avoidable trades. |
But what separates the novice from the skilled professional is what each does with the data from the event. The seasoned pro will kick him or herself, see what they could have done differently, and improve their trading style based on that experience.
The novice or unseasoned trader on the other hand, will implant the feelings and emotions associated with the experience into their memory, generalize it, and access it immediately at the first sign of a possibility of further loss. It is akin to trauma, and the mind handles it accordingly. It is the nature of the mind to make the erroneous assumption that the past will repeat itself into the future. Therefore, it remains hypervigilant for the first sign that brought about the initial loss.
The impressions that the trader holds are now a firm part of the newly modified reaction system, causing a variety of further trading problems. In truth, the loss of confidence and the increased sense of fear has a far higher price tag than the monetary loss itself. If you were to total the losses from all the subsequent bad trades and poor decisions, I'm confident that you'd find that the initial loss was small by comparison.
How does one extract some value from the loss? To begin with, sit down and create a diary of the trade. What happened? Why? What was your contribution? As long as you see yourself as a helpless victim of the market's whims, you'll never be able to learn and grow from the experience.
Now ask yourself two questions:
1. What did I learn?
2. What would I do differently under similar circumstances?
These are the assets that you acquire from the loss. These are the building blocks that will go into making you a better trader. You can choose to use them to their fullest advantage or you can ignore them and doom yourself to make the same mistakes over and over again.
|Company:||Qi2 Technologies LLC|
|Address:||4800 Baseline Road, Suites E104-370|
|Boulder, CO 80303|
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