How to Take a Loss

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There are quite a few books on how to write to make money in the market. Some of them are even people who have money to traders written! What you see is not often, however, one of the books or articles on losing money. “Cut the losers and winners, you can run” is commonsensical advice, but how, when the position is a loser? Interestingly, the majority of the companies I have not seen to formulate an answer to that question, if they bring in one position. They focus on subscription, but then there is no clear idea of ​​leaving, especially if the exit is to put them red.

 One of the real culprits, I believe, it is difficult for traders to have in separating the reality of losing trade in the psychological sense of feeling like a loser. At some level, many traders equate losing with the loser. Frustration he expresses it, makes them anxious, in short, it interferes with their future choices, because their P & L is a blank check written against their self-esteem. If a distributor has not focused on self-focused, distortions are inevitable decision.
Particularly valuable part of the Classic Book Memories Stock Operator describes Livermore approach to buying stocks. He would sell a lot to see how the stock reacts.Then he would do that again and again, by examining the demand for the underlying problem. When his sales did not push the market down, he would transfer an aggressive buy-side and make their money.
What I thing about this method is that the Livermore losses were part of a larger plan. He did not just lose money, he was forced to pay for information. If my maximum position size is ten contracts ES and I buy a lot of range of heights, in anticipation of the outbreak, I went to check the water. Although I might not move the market in such a way that Livermore could be, I have to test my hypothesis, the outbreak began. Then will be closely monitored.Like the other to behave, on average, at the upper ends of the series? How is the market absorb the activities of the seller? Like any good scientist, I am gathering information about whether my hypothesis is supported.
Let us assume that the spread of the disease does not get back to the original motion and the area above the range of some of the increased selling pressure. I’ll take my loss One deal, but then what happens from there?
The losing trader is responsible for frustration: “Why do you always get caught buying the top I can not believe that” they “ran the market against me, in these markets it is impossible to act.” Frustration and self-focusing of losing trader to take away any information about the transaction.
In Livermore mode, however, successful retailers will lose out to see a lot as part of a larger plan. The market was broken nicely, he would have scaled the long trade and likely to make money. If A-Lot was a loser, he pays about that, at least in this series tied to the market, and he could try a place to turn around and too short to be able to take advantage of the return at the bottom in this area.
Look at it this way: If you have a high probability trade set up and trade do not earn money, you only need to pay for important information: the market does not behave as it is historically the rule. If a robust piece of economic news that normally sends the dollar screaming higher fails, go to the currency and buy a watered down, you have just gained some useful information: It is the underlying lack of demand for dollars. This information could be a lot more upside potential than the money lost in early trade.
I recently received a copy of the article in Futures Magazine retired dealer in Everett Klipp, who called the “Babe Ruth is a CBOT” was. Klipp distinguished himself not only in his fifty years of experience in trading on the success, but also by more than 100 dealers.Speaking of his short-term trading system observed, clip, “You love and hate to lose money to make money successful.It’s against human nature, what I teach and practice. You need the mankind. To win”
Clip-on system was quick to take profits (and thus hate the idea of ​​making money), but even faster than losses (loving to lose money) to implement. Instead of viewing losses as a threat, Klipp treated them as an integral part of the trade. Confirms the loss of a small merchant-discipline and emotional control, he believed. Losses are not failures.
So here is the question I propose to all people seeking a high probability trade: “What tells me that my job is wrong, and how I could use this information useful, then?” If you are marketing, not losing trades: only trades of money and business, which can make your order to make money later.


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