Seasoned traders know how to turn losses into gains. They don’t mull over past defeats or trading losses. Instead, they use the setback as a motivator, an opportunity to hone their skills, grow, and improve. They examine what they did wrong, learn from their mistakes, and view the temporary setback as a launchpad from which to achieve a higher level for future performance. Seasoned traders work under the assumption that with proper risk management, they can win as few as four trades out of a dozen and still come out ahead.

They have an optimistic attitude and are not afraid to face their limitations head-on. They look forward to examining their past “losing” performance in scrupulous detail and discovering the factors that led to poor performance. Once they identify the problem, they can correct these factors, perform the task again, and hone their skills further so as to enhance their performance. The more you can self-monitor your performance and take decisive action to make corrections, the more profitable you’ll trade.


It is useful to keep accurate records of all factors that may impact the outcome of your trades so that you can learn from your losses, improve your performance, and do better next time. From a psychological frame of reference, document factors associated with the loss, such as whether you were in a bad mood or acting on impulse rather than with a calm and relaxed trading style. Other factors, such as market conditions, trading strategy, preparation for the trade (such as backtesting), or risk management strategy should also be noted.

Armed with this knowledge, one can study a series of losing trades and identify the factors that led to the trades “going wrong.” One can then change these factors in subsequent trades and monitor improvement. The key is to take an upbeat psychological approach. Rather than mulling over one’s failure, it’s more useful to view past failure as an opportunity to grow and improve. Viewing a loss as a growing experience changes your perspective immediately. You will now focus on what you can do to achieve the bigger goal of becoming a seasoned trader, rather than mulling over the loss from a few of the many trades you will make throughout your career.

So try changing your viewpoint when it comes to losses. Be willing to self-monitor your trades and make changes. You will see your mood and mindset change dramatically. It may not be pleasant to face failure and accept your limitations, but looking at these failures in a broader perspective can change your mood from hopeless, pessimism to excitement and optimism. By monitoring the factors associated with poor performance, and changing these factors in future trades, you can turn a loss into gain, and be on your way to becoming a winning trader.

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