How To Recognize Your Losses As A Trader !!!

Lots of financial traders and Business leaders have find it hard to keep up with their emotions when losses occurs. This article illustrates losses in financial market such as Cryptocurrency trading, Forex Trading, Futures and Stock market. Moreover, it can be applied to real life trades and businesses.

Trading financial market deals with lots of emotions and psychology.
Why ?
You are simply trading against billions of genius. Think about it !!!

There is a saying consistency is the key. Losses are inevitable and unavoidable.

Most captains only knows the way of the sea during turbulence.
Without losses we can not learn what it means to be a winner and Without wins we cannot know what it means to lose.

The question you might want to ask your self ?
Does the loss worth it ?

Well ! It might and Might not even worth it. Sorry to burst your bubble.

A loss doesn’t worth it when you don’t get enough information and knowledge.
You can fail and have losses. And still continue to repeat the same mistake in different cycle while thinking you are doing the right thing.

How to Overcome your loss is always the ultimate goal.

Identifying the type of losses made me a successful trader.

Here is the tip I'm going to share. This helps you control your emotions when you have losses, More win rate and Risk management.

We have 5 basic type of losses.

Actual Loss

Situation Loss

Perceived Loss

Maturation loss

A necessary loss

1. Actual Losses

This are losses that occurs when you separate your real wins or profit from your loss. This can also be termed as your total losses but its a bit different.
Actual Loss are real loss that occurs when you follow your real strategy, loss management and risk management.

For example, You made an entry analysis for a buy on Ripple stock but due to sudden bearish momentum. You made a sudden sell order due to FOMO (Fear Of Missing Out) but unfortunately you lose.

That is not an actual loss. It’s a gambled Loss. This is very bad for psychology and wins.

If you follow your usual analysis and you lose then its an actual loss.

2. Situational Loss

This loss are unavoidable and happens Occasionally. This losses help you keep informed that anything can happen in the market. This might be news event, manipulation or personal negligence. This losses are always necessary to note down.

Why ?
It might be caused due to your inadequate Information or it might be an event you couldn’t control .

Example :

1. A newbie trading the forex market on NFP (Non Farm Payroll) days; (Inadequate Information)
2. A professional trader having loss due to volatile news event; (uncontrollable)

Please note that : Situational Loss can happen to a newbie or an expert trader.

3. Perceived Loss
This are loss that occurs due to internal prediction and doubts. As a trader, If you don’t have much confidence in taking a trade. Then don’t do it. It will yield you loss 90% of time.

Perceived Loss are not actual Losses. They are gambled loss — This type of loss doesn’t deserve to be part of your trades and it will affects lots of your wins. So kill that mentality.

4. Maturation Loss
This happens in rare case but occurs often. This loss calls for sensitivity and concern and very helpful to determine if you are doing the right thing or the wrong thing.

This are losses over time. You might tag your self to only 20 % if it happens then there’s a call for attention. You stop trading when you realize your losses has matured to a certain level and you point to things you are doing wrong and where you are deviating from your basic principles.

Note : Whenever there is Maturation Loss, it doesn’t mean your approach to market is no more working. You just need to check, sit back and make necessary adjustment.

This kind of loss helps you keep consistency and risk management which is very important.

5. A Necessary Loss

You can’t always win 100% of time. This loss occurs as part of your win. You are not the only one in the market. Therefore, you are required to give to the market at some point. You are not made Perfect in trading. You lose and learn.

If you are able to control other losses. Then you have all space to locate the necessary loss and keep most of your winnings from losses. This is where the major growth comes in.

Your Actual loss really should comprises of your Necessary loss and Situational loss.

Perceived loss is not a good parameter when trading. So never make it happen.

Maturation loss occurs when you have accumulated actual losses to some point. Then you need to re-evaluate. This is how you grow.

Recognizing your losses really helps you keep emotion aside and focus at getting better when trading.

You can make a journal for your losses. Get better at maintaining your loss then you can leverage on winning.

List this type of losses. Give it a score and rank your self in each trades and see if you can locate where you are really missing it and the type of losses you are really having.

Hope you find this helpful and educative. Try this and you will see yourself improving.

Follow me and applaud this article if you find it helpful. Thank you

More story !!

Let’s check out this little scenario.

Here is John a Novice crypto trader. Who has no mentor or experience. Fortunately, he has attain some theoretical level of knowledge.
John begins to trade And lost 20 % of his capital in his first week of trading.

He became confused.
Why ?
He thought he already learnt all necessary skill. He went back for a week to learn more and learnt from his losses.

John thinks he doesn’t use a good market structure analysis. He began to learn and apply more skill to his trades.
He recorded 40% loss at the end of the month.

What do you think might be John’s problem.
Practically, Nothing.
He hasn’t just been able to locate his losses.

- John can’t know it all
- John can never get the Ultimate strategy
- John needs to be informed of his actual loss
- John need to know his loss before learning more
- John needs to know that learning is a process
- John needs to know that Loss is a leverage

Are you John ? Make that adjustment today !!!

Having loss can deal with you.
Overcome it today.

How can you fight your enemy when you don’t know him