Losses are part of trading

[Rambo35]

I think no matter how good you are as a trader, you will not always get every trade right and you will face a trading loss every so often. In my opinion that is perfectly normal and part of trading and risk management prevents that loss from having a big impact on your overall portfolio.

No trader likes to record a loss, at least I never met a happy loser. I did come across an article on the Paxforex blog which made me think about it (Losses As Inevitable Part of Forex Trading). I guess everyone has a different measure for success and failure, so I was wondering what you classify as a good strategy for yourself? Do you look at how much money you generate, the percentage of your trades you got right, etc.?

I ultimately measure it by how much money I have earned and if the returns are consistent.

 

[Easy Trader]

I look at it as a %return monthly, it doesn't matter much how much money it actually is. It can be a 1$ profit when starting out but in a few years will be a $1,000 profit. The %return is still the same and the manor the profit was made is the same. I measure trading as the sum of many trades, monthly/quarterly/annually. In my experience if one can nail a consistent %return (what ever length of time they measure by) then the currency amount in the account will take care of itself. When you have a method/strategy that you know is profitable losses are just a part of doing business......edit: with proper money management of course.

 

[BlindFA]

First, measure success by logging in each and every trade you take and making sure you're following your rules. It's easy for beginners to be too short minded. They see 2 losses in a row and assume the system they are trading is bad.

Losses are part of trading, but so is your attitude towards them. If you're losing, verify why. Are you following your rules? Could you have done anything to prevent it? Could you tweak your system in a way that would make you lose less? etc.

 

[Master Forex IB]

Loss is present every time in trading . We have to cover the limit of loss to get profits.When we enter in forex world our loss starts as spread is charged over trades. When market moves to wards profits then it is possible to get rid of loss.

 

[Fxpipper]

Every trader has a DD, loss is part of the whole package and we do get to learn from it..
I do record all my trades even the ones that turn out to be a squib..

 

[Rob Taylor]

Its an interesting subject, and can have a big impact on your trading performance.

Lets turn the question on its head. A lot of people only really focus on the losing trades, but winning trades can also have an impact on your trading performance. For example, the more winning trades you have, the more confident you can become, which can lead to over confidence, and lead to taking more risky trades. The other side of the coin is when you have a series of winning trades, you want to keep that record intact, so you can miss out on some good opportunities by waiting too long for the perfect trade, to protect your winning streak.

At the end of the day you have to have a method that you are confident in, and you have to trade mechanically based on that, and measure your success in pips at the end of each week. Win or lose if you are consistently banking pips, week in week out, then you have to be happy with that i feel.

 

[ezrydn]

I see we look at win/loss differently. To me, I gain nothing from a win other than the satisfaction, or validation, that I made a correct assumption. It's when I lose that I get excited because I know I'm about to learn/relearn something I overlooked.

 

[Fxpipper]

I guess it all comes down to how you perceive it, some traders prefer to concentrate on just the wins whereas others prefer to analyze the loss and see what they can learn from it - personally I believe in the later and guess what, analysing the losses does teach you a lot.

 

[mumuy]

losses and profit are both necessary in trading...

 

[Rambo35]

I guess it all comes down to how you perceive it, some traders prefer to concentrate on just the wins whereas others prefer to analyze the loss and see what they can learn from it - personally I believe in the later and guess what, analysing the losses does teach you a lot.

I agree. I also take a look at the entire picture.

 

[safitri]

yeah loses is part of trading, it also part of all business type ...
no loses=no business
no profit=no business

 

[khan muhammad]

Yes, loss is a part of trading. Without loss we can't do anything. Loss gives us experience,knowledge in future it will help us by avoiding any big mistakes.

 

[xProphet]

For me it is amount of trades "won" and the amount of money won on them. I try to go into the trading day with a clear goal; How much i want to make and how many trades i have to place to in order to get there. (Or how many trades I should place.) However, I do enjoy; "I get 8-9 out of ten" bragging rights

 

[bullnbear]

This is a big one that people struggle to comprehend. Instead of accepting losses they tend to look for ways of stopping getting losses. This is impossible.

You have to learn to accept them and once you do you will improve your trading.

Using the pipdaq setups I know that I will win on average 74% of the time so I also know that each trade has about a 26% chance of losing. As long as you remember that your edge needs a big sample size to play itself out then you remember that 3 in 4 are winners and I just need to take every trade to profit.

 

[Rambo35]

This is a big one that people struggle to comprehend. Instead of accepting losses they tend to look for ways of stopping getting losses. This is impossible.

Yes it is a really big hurdle for many to comprehend. Every trader will face trading losses from time to time.

 

[michael77]

It is completely impossible to win in each trade. Even an expert can't win in each of every trade they open. Each of every trader has different strategy. My best advice to all that if you have been losing your money on consistent basis then there is some problems in your strategy. All you need to is find out those problems. I believe it would help you to take a better decision for the next time.

 

[ezrydn]

I primarily trade two ways; scaling and baskets. For each, I've designed a way to "test" my trades without facing drawdowns of any size. How many of you go that far before pulling the trigger? I see the trade actually begin to work in my favor before I instigate a true trade. That, my friends, really is a "loss-cutter."

 

[Rambo35]

I primarily trade two ways; scaling and baskets. For each, I've designed a way to "test" my trades without facing drawdowns of any size. How many of you go that far before pulling the trigger? I see the trade actually begin to work in my favor before I instigate a true trade. That, my friends, really is a "loss-cutter."

I agree and I do the same. It makes no sense to go into a trade from the start without running a test and your very first entry point is usually off by at least 50 pips all the time.

 

[Wajeeh93]

I am gonna have to agree with you here. There is no argument over the fact that losses are a part of forex trading because forex trading is more like a business and no matter what business you talk about, there are always going to be profits and at times there are going to be losses as well in a business and forex is not going to be any different in this regard.

 

[rwtc]

This is a big one that people struggle to comprehend. Instead of accepting losses they tend to look for ways of stopping getting losses. This is impossible.

Agree. I think the main reason why this is so is that a trader has to think in probabilities. An everyday man usually has a different mindset and can't think in probabilities. If he wants to be a trader, he needs to learn this mindset, and only after that will he be able to accept losses as part of trading.