How to Trade Through the Pain

Trading is not all fun and games. We do not make money on every trade. It is not like other careers or jobs where you work and then get paid. Our pursuit is more like the life of an entrepreneur than an employee even for part time traders with full time jobs. Our idea may work or it may not. The stock we just bought may take off or it may fall. After many years of hard work we may have enough capital to pay off our house or lose $50,000 of our hard earned money and have nothing to show for it but an education in trading. We may become a millionaire in a runaway bull market or waste five years of hard work with nothing to show for it.

Here are 10 painful aspects of trading and what to do about them.

The pain of losing money. (Trade smaller so it is not as painful, it is just an outcome not an emotion).
The pain of being wrong about a trade you were sure about. (You lost simply because the market didn’t match your trade, trend followers lose money in choppy markets, swing traders lose money in trending markets, it’s the market not you. As long as you followed your own plan.)
The pain of a draw down in capital.(Even the world’s best money managers do not continually hit all time equity highs. Your path may look like this $10,000 to $20,000 back to $15,000 then to $25,000 again to $20,000 then finally up to $30,000. Mine was rockier than most and spanned over a decade, and after blood, sweat and tears I have a decently higher six figure net worth that I removed mostly from other traders in the stock market.
Consecutive trading losses hurt. They make you doubt yourself, your method, and your system. (You need to remember your winning trades, your winning years, or your back-testing, or paper trading of the method. You have to keep the faith or get with a method you have faith in).
The embarrassment of public losses. You told everyone who would listen about a great trade you were taking and you were wrong. Social media has given us all the ability to embarrass ourselves anytime we want. (Never be overconfident in any trade, but always be sure of your stop loss.)
The pain of of admitting you were wrong. (Cut your loss and move on to the next trade, trade reality not your ego.)
Losing paper profits, you are up 20% on a trade then a massive whip saw takes back those profits in one move. (Take your trailing stop and move on to the next trade, there is truly no reason to cry over spilled milk.)
You are following a guru and come to realize he truly is a salesman not a trader. (You stop following gurus and look to learn how to trade for yourself using a method and a trading plan).
You buy a super hot stock that you have researched for many weeks then it goes down due to a bear market. (Only trade stocks long in up-trending markets)
You start trading a system that did amazing in back-testing and promptly lose 10% of your account. (You have to stick with it so it can win in the long term, you may need to make slight adjustments in position sizing or stops to account for volatility that you may have missed.)

Here are 10 painful aspects of trading and what to do about them.

The pain of losing money. (Trade smaller so it is not as painful, it is just an outcome not an emotion).

The pain of being wrong about a trade you were sure about. (You lost simply because the market didn’t match your trade, trend followers lose money in choppy markets, swing traders lose money in trending markets, it’s the market not you. As long as you followed your own plan.)

Consecutive trading losses hurt. They make you doubt yourself, your method, and your system. (You need to remember your winning trades, your winning years, or your back-testing, or paper trading of the method. You have to keep the faith or get with a method you have faith in).

The embarrassment of public losses. You told everyone who would listen about a great trade you were taking and you were wrong. Social media has given us all the ability to embarrass ourselves anytime we want. (Never be overconfident in any trade, but always be sure of your stop loss.)

The pain of of admitting you were wrong. (Cut your loss and move on to the next trade, trade reality not your ego.)

Losing paper profits, you are up 20% on a trade then a massive whip saw takes back those profits in one move. (Take your trailing stop and move on to the next trade, there is truly no reason to cry over spilled milk.)

You are following a guru and come to realize he truly is a salesman not a trader. (You stop following gurus and look to learn how to trade for yourself using a method and a trading plan).

You buy a super hot stock that you have researched for many weeks then it goes down due to a bear market. (Only trade stocks long in up-trending markets)

You start trading a system that did amazing in back-testing and promptly lose 10% of your account. (You have to stick with it so it can win in the long term, you may need to make slight adjustments in position sizing or stops to account for volatility that you may have missed.)

Whatever the pain, just don’t quit, there is gold to be found in the stock market trading and investing correctly over the long term.

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