The unfortunate part about stock trading is that we all have to take losses.  Of course this doesn’t mean that we have to like it nor does it mean that we should give in to the notion that one must lose while trading but it is an inevitable fact of trading.  We can learn to control, reduce and eliminate some of the losses but to do so we must stay within our trading business plan.  Something as simple as reducing or eliminating some losses can make your winning percentage and profits increase dramatically without needing to have more winning trades but this takes real discipline which unfortunately many traders do not have.  Lack of discipline may in some ways be a very common trait among traders just by their very nature.  If someone has the trader’s mindset regularly making trading decisions, accepting the responsibility of their trading decisions good or bad, being willing to take on a certain amount of risk it is not unlikely that they do the same thing in other parts of their lives.  This sounds very much like someone that has entrepreneurial tendencies possibly being a business owner, self employed or wanting to be self employed likely with a strong desire for total freedom or independence from a structured work environment.  This is definitely not a bad thing but we do need to learn to control or at least tone down some of our natural competiveness on occasion.

Losing on a trade is not necessarily a bad thing.  If all of the trading rules were followed and the trade was made because specific conditions were met, some trades just don’t work out.  The annoying losses come from mistakes, misreads in the market, taking too big of a chance on a bad setup or gambling instead of trading.  We all know that losses will occur but what is very important is how you deal with them.  Does your trading define you in the respect that if you lose on a trade you feel horrible about it and yourself letting the loss influence other parts of your life or do you realize that trading is just a business?  Each trade is just a business decision there is no specific trade that is more important than any other, some trades are good business decisions and some are not.

I have observed traders that actually become vengeful traders when they lose.  They take losing so personal that they feel the uncontrollable need to jump right back into the market with the intent of immediately making up the loss; they want to beat the market.  They seem to want to make the market pay and prove that they’re right.  This may work on occasion but typically this is a very dangerous way to trade because the setup they see will rarely be a good one if they see any setup at all.  The trader is trading based purely on emotion at this point which is also when they may make the transition from trader to gambler.

Countless people have told me over the years that they consider trading in the markets, especially in the Forex market, to be nothing more than gambling.  When I hear this depending upon the context of the comment, the people involved and the situation I will often times just agree.  There is no reason to defend something to someone that is completely uneducated on the topic since they will never understand and most likely don’t care to.  Many people couldn’t begin to understand the logic behind trading and why we do it at all.  What I do find unfortunate however is when those people are actually right and a trader does become a gambler.  This transition can be permanent or temporary but regardless it is generally a very bad way to trade.  Trying to guess at which way a market may go rather than doing your research and gathering as much information as possible is a great way to get hurt quickly.

The paramount reason that most of us trade is to increase the size of our trading accounts. There is absolutely no reason to take the chance to make a few dollars while exposing the account to substantial loss.  It takes too long and too much time and effort trading to get back to even when all we had to do was nothing, we need to be disciplined and sit back and wait for a good opportunity.  Trading is very difficult, every day we are literally trading against the very best traders in the world.  I believe that we need to learn to control possibly the only part of trading that we can control which is ourselves.  Trading against other traders is one thing but successfully trading against ourselves is virtually impossible.