Apart of being a good business man (or woman) is knowing when to take a loss. No business in this entire world has never taken a hit before, it is mathematically impossible. Every company has had products that fail, plans that fall through and investments that lose value.
The same is true for stock traders. There is no such thing as a perfect strategy with no downside risk or losses involved. It is truly impossible to create. So, why do traders get so worked up about losing money on a trade?
The expected performance of traders on Twitter/StockTwits is that you don’t loss, you have to be ‘right’ or else you’re no good. I do not know why that is the case, but is the unfortunate reality in the financial social media realm.
We now are going to speak about something that is unfathomable, by the standards of the online trading community.
We took a loss today in a swing trade and we couldn’t be more proud of it. Yesterday we entered long $DBA (commodity etf) on the thesis that the bull flag it was building.
Today, it gapped down and stopped us out below yesterday’s lows. The pattern failed, we didn’t.
Too often a trade failing is believed to be a failed trader, this is not true. We don’t get it right all the time, maybe not even half the time but it does not matter – at all. Why? Because following a process, day and day out, trading the patterns you know, with defined risk – everything else should not be concern. The