Though losing trades is a traditional a part of the trading process, it’s something that many traders –each newbies and pros– have difficulties with.

I think that the major reason behind the issue in coping with losses lies with the lack of expertise of its nature and its impact on trading psychology slightly than actual psychological problems.

Today, I’d prefer to talk concerning the 4 stages of loss in trading, namely, denial, rationalizing, depression, and acceptance.

Do the terms sound familiar? They need to because they’re much like the 4 stages of grief! Do note, nevertheless, that they’re applied otherwise in trading.

Stage 1: Denial

The primary stage of loss allows you to take care of the losing trade.

On this phase, you deny to yourself and to others that your trading idea was improper and that the loss wasn’t your fault. Reasons like “I used to be stop hunted” and “I didn’t really take care of that trade” are normally used.

There’s nothing improper with feeling this fashion, especially in case you’re latest. It’s a method to ease the blow to your ego, survive the loss, and move on.

Stage 2: Rationalization

After denial, you progress on to rationalizing your trade setup.

That is the purpose where you indicate all the things that’s right about your trade idea and don’t even take into consideration what you probably did improper.

You cite the appropriateness of your trading plan, profit goal, stop loss, and entry point but totally disregard that you simply actually did lose the trade and made a mistake somewhere.

Stage 3: Depression

At this point, you’ve already looked in any respect the possible external reasons on your loss. You then turn inward and consider the concept the loss was completely attributable to your personal doing.

Even though it’s reasonable to take responsibility on your loss, blaming yourself an excessive amount of could be damaging to your forex profession in case you consistently doubt yourself.

You would possibly ask yourself questions like “Is financial trading really for me?” and “Why go on in any respect?”

You could possibly even wind up withdrawing yourself from the business altogether in case you can’t find enough reasons to maintain pushing forward.

Those that have experienced this type of self-doubt can attest that the longer the losing streak is, the more intense the sensation of depression.

Some even speak about pursuing other opportunities and giving up on foreign currency trading altogether!

Stage 4: Acceptance

On this stage, you start to comprehend that it’s unhealthy accountable yourself for all the things that went improper.

Although you’ve accepted that the loss was partly your fault, you might be also mindful of the proven fact that the market is a wild untamed beast and that there are many aspects beyond your control.

Let me make clear though that acceptance isn’t simply about feeling okay concerning the loss. In reality, acceptance is more like aligning yourself with reality and realizing that the loss can’t be undone.

Once you reach this stage, you accept that you will have made some mistakes in your part but that there are also belongings you are unable to regulate.

At the top of the day, it’s essential to remind yourself you can never truly reverse what has been lost but you can make up for it.

One obvious method to do that is to have a winning trade and recuperate financially, but you’ll be able to work on rebounding mentally as well.

You’ll be able to give you improvements on your trading strategy, exercise higher risk management, or simply determine learn how to handle your losses higher.

As a substitute of simply denying the loss, you will have to maneuver on, adapt, and grow.

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