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(US) How to Pull Back and Bounce Back From a Bad Trade
By David Jenyns
Everyone makes mistakes in the markets. But, how do you bounce back and pull
back from a bad trade? There's really no such thing as a perfect trader, and
don't believe anyone who says they've never had a loss. They have, and if they
are any good, they've learned from their mistakes, and then put the mistakes
behind them.
The key to success is learning how to pull back. First, you have to
understand the basics. The good news is that the more you trade and the more
experienced you become, the fewer mistakes you'll make. If you use stops and
pull back on all your trades, even a few large mistakes won't wipe you out.
Instead of being perfect, you should aim to improve continually, while using
proper trading techniques and money management skills. But while it's in your
power to prevent avoidable mistakes, some market events can't be planned for.
The market cannot be made into a completely safe place
If you are alert and nimble when you trade, and have stops in place, quick
market changes shouldn't hurt you badly. But it's always possible to be
completely surprised, to have a disastrous computer crash or other equipment
failure at the wrong time, or to simply be unable to exit a large position
quickly enough. Occasionally, you may be wrong about a trade you felt very
confident about. Events can sometimes conspire against you, causing you to
sustain a large loss. And though losses like these are devastating, you can
recover from them, with a bit of work.
Often the best thing to do after a big loss is to take some time off from
trading. I recommend doing something else for a week or two. It will put the
loss in perspective, and give you time to recuperate from the emotional shock.
When you're ready for it, take some time to analyze the experience. Setbacks
can be great learning opportunities, if you have presence of mind to take
advantage of them. Spend some time figuring out the best way to keep the same
thing from happening again. Then add these ideas to your trading strategy.
Consider if it was a weakness in your money management skills or your strategy
that contributed to the problem. Decide what you need to do to keep the problem
from happening again, and then do it.
Once you've made your changes to your trading system, trade on paper or in a
simulated account for a while. This will help you to feel comfortable and in
control before you start trading your account again. You will need to get your
confidence back before you start actually trading. Also, your time off will have
left you a little out of touch with the market, and this is a good way to get up
to speed without risking capital.
When you return to actual trading, treat it as a new start, free of pressure
to regain lost capital. Whatever you do, don't keep punishing and distracting
yourself by trying to make up for the loss. Don't affect your thinking by
putting that kind of pressure on yourself. Consider the mistake a thing of the
past. The only way to trade successfully is to trade with confidence. If you're
feeling guilty or are scared of a repeat disaster, you won't be able to trade
with a winning attitude.
This is how you pull back. Once you have that winning attitude back, make
only trades that you have confidence in. With your strategy fine tuned and your
confidence back, you will soon be completely emotionally and mentally recovered
from your loss. It will become one of many points on the road that you've passed
on your way to becoming a successful trader. About the Author -=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=- David Jenyns is recognized as the leading expert when it comes to designing profitable stock trading systems.
Discover the "secret formula" of trading that anyone can use to consistently generate BIG profits from the market by downloading your FREE copy of David's new Ultimate Stock Trading Systems course.
Click Here To Download ==> Stock Trading Systems http://www.ultimate-trading-systems.com/stocks.html -=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
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