Losses in trading is inevitable, everyone goes through them. With the ever-changing environment, even successful traders go through slumps.
There is a story about a person on the internet who went through two years without a negative month, making roughly $2000 a day on average during the period. Incredible right? They then spent the next year in a big slump unable to string two profittable months in a row. You can only imagine what an emotional rollercoaster that person went through, from total high to ups and downs. So you might be asking, how do you end a bad streak? Or avoid it?
Well, the truth is the market is unpredictable and it can change at any time, even during your beauty sleep. We strung this guide, in no particular order, up to help you keep positive during the highs, but also the lows, where we hope will keep you from total breakdown.
If you haven’t already, do read our blog on First Steps in Stock Investment in 2021.
Download our app, available on both the App Store and Google Play Store, to practice trading in stocks, crypto and forex.
Tip 1: Don’t dwell on it
The one thing people say when you are down is to not dwell on the issue, and in this case, its also true! Everyone gets rejected, everyone overpays, everyone goes through a tough period – that’s just part of life. When picking your next trade, be more conscious of your decision, talk out loud, note your thoughts and feelings to see if that choice is the right one. But most importantly, don’t dwell on it!
Tip 2: Review your trades
Detailing the trades that worked well can help you in the long run. By keeping track, you can see which types of trades but also which indsutry works well with you, but also the setup you set to help identify the ones that are most effective for you. Noting the bad trades will help you keep away from future unpredictable/bad trades.
Tip 3: Find your prefered industry
No two indsutries work the same. Finding your niche industry will help you specialise and focus on what works well. Some traders are unable to work well because there is a mismatch between their knowledge and styles, so to avoid this, ask yourself some questions like: What are my strengths and weakness as a trader? What are some qualities that help me be successful? What am I good at?
If you’re still unclear or undecissive of which industry to specialise in, you can always take personality quizzes to help you choose the best currency and industry to trade, but also which style you may need.
Tip 4: Don’t be greedy
This is a simple point. You’ve heard/read stories and you most definitely seen it in movies set somewhere around Las Vegas, most people tend to get very greedy when they are on a big run. The exact same thing applies to trading, don’t throw all your money at once. Rather set yourself a budget, a max amount you’ll spend on a company – this way you won’t gamble your whole money on something that could go sideways very quickly.
Tip 5: Research
This is probably one of the top 5 rules of trading. Always, and we repeat the word ‘ALWAYS‘, do your research. Never ever gamble your money away without reviewing exactly what you are buying. Treat stocks the same as purchasing a car, a tv, a bed or other goods – do some research on stock prices, trends and past results even if it was a year ago. Researching can save yourself from big losses.
Tip 6: Stop Orders
This specific option is not widely used in most brokers, but something you should look out for. Stop orders or stop losses enables traders to sell their shares once they fall below a certain price. This is one way to safeguard the amount of losses you take, even if you are busy or away, but also takes the emotion out of trading – giving you the time to think if you want to sell at a much advanced time.
Tip 7: Visualise Losing & Winning
Athletes visualise themselves winning a game. You need to put yourself in the same state of mind that will not only inspire confidence, but also help you realise the steps you need to make winning a reality. But you also need to visualise yourself losing. Accepting this fact ahead of time can help you get within the same mindset. A good example is being rejected from a job offer or a dating proposal – you need to feel the worse that could happen. This way, you’ll be better equipped to handle losses and potentially save yourself from making rash decisions under pressure, but also giving you a proactive step to avoid the outcome, such as a plan with a entry and exit plan.
Download our app, available on both the App Store and Google Play Store, to practice trading in stocks, crypto and forex.
Don’t forget, the biggest challenges in trading is to be as postivie and focused as possible, even when your account is in the negative. By keeping your confidence intact, you’ll have a better chance of making it out of a slump or keeping your account in the green.
Download our app to practice different trades with virtual currency before heading out and spending your money.
BullBear Blog 