Overcoming 10 of the Pains in Trading

Trading is not all fun and games. Traders do not make money on every trade, most don’t even make money on half their trades. It is not like other careers, jobs, or hobbies where you work and then get paid. Our pursuit is more like the life of an entrepreneur. Our idea may work or it may not. The equity, option, or futures contract we just bought may go up in value 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. 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 much less painful, and just one outcome of the next 100.)
The pain of being wrong about a trade you were sure about. (You lost simply because the market wasn’t conducive to your particular trade, trend followers lose money in choppy markets, swing traders lose money in trending markets, the market picks the particular winning trade not you.)
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 to $15,000 to $25,000 to $20,000 to $30,000 and then the climb into six figures and beyond.)
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 proof in back-testing, or paper trading of your method’s profitably.)
The embarrassment of public losses. You told everyone who would listen about a great trade, and you were wrong. (Never be overconfident in any trade, but always be sure of your stop loss. Always be uncertain in your trade winning or losing, just follow your plan. )
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 $1,000 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 and not a trader. (You stop following gurus and look to learn how to trade all by yourself.)
You take a position that meets all your entry guidelines and then it hits your stop loss. (Follow your plan, exit the trade, and say “next”)
You start trading a system that did amazing in back-testing and promptly lose 10% of your account in a draw down. (You have to double check to see if you made any mistakes in your research, if the method is valid then 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 much less painful, and just one outcome of the next 100.)

The pain of being wrong about a trade you were sure about. (You lost simply because the market wasn’t conducive to your particular trade, trend followers lose money in choppy markets, swing traders lose money in trending markets, the market picks the particular winning trade not you.)

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 to $15,000 to $25,000 to $20,000 to $30,000 and then the climb into six figures and beyond.)

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 proof in back-testing, or paper trading of your method’s profitably.)

The embarrassment of public losses. You told everyone who would listen about a great trade, and you were wrong. (Never be overconfident in any trade, but always be sure of your stop loss. Always be uncertain in your trade winning or losing, just follow your plan. )

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 $1,000 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 and not a trader. (You stop following gurus and look to learn how to trade all by yourself.)

You take a position that meets all your entry guidelines and then it hits your stop loss. (Follow your plan, exit the trade, and say “next”)

Whatever the pain, just don’t quit, there are great rewards to be found in trading right over the long term.

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