Throughout my short trading career I can’t help but notice that I hear way more good things from other traders than bad. Anything bad that I receive is usually by personal email. It appears that we are quick to brag about the winners but stay quiet when there are losers. I’ve noticed that I have been just as guilty. Following a series of losses with one big winner and people race off to the twittersphere to announce how awesome they are! Not knowing that they’ve been racking up the losers left and right you think they must be an awesome trader! I see this happen a lot and its time to put some realizations behind all the chatter. The biggest mistake traders make…
Not talking about their losses.
There are a million things that you can do wrong as a stock trader and of course if you could avoid all of them you wouldn’t have losses. The realty is, dealing with a loss is part of the job. Yes keeping them as low as possible is always the goal, but that too isn’t always avoidable. So when that big loss happens, or you’re just on a losing streak…tell someone!
Its a lonely world as a trader, when you suffer a big loss, you have to take the brunt of the blow. All your buddies in the chat room you belong too will feel your pain but it doesn’t effect their portfolio, life or mood. Its effecting yours. We know what steps to take usually after a big loss, or even just a steady row of losers because that’s just the life of a trader. We should get up and take a walk and get some fresh air but I don’t think thats enough. I think the most important thing to do is to TALK about it! Your spouse, friend, sibling, or your parents. I know we have all hid our losses at some point. I have, and it nearly killed me from the stress and anxiety.
Do it as soon as possible, don’t wait because you think you’ll make up for it in the next trade. Talking to someone will help you rationalize the situation better, realize that it’s ok and that you need to reset and follow the rules.
Here’s a personal example. I was already having a rough month but kept it all to myself. In my frustration I took a really large loss about $1,100. Now thats a lot for me and I never should of let it happen. Since I wasn’t being open about my trading up till then, I really felt ashamed and embarrassed to tell anyone at that point. As I’m sure most of you could guess, the next thing I did was continued to trade and I made it much much worse.
Since that moment and after coming clean about what happened, the person I consoled to was more mad that I was keeping everything in, not that I was losing as much money as I did. After a long talk I was able to let go of all those feelings I had that was making my trading worse. The next day I felt like I had a fresh beginning and I started becoming profitable again. I’ve kept a very open conversation since that moment and it has helped tremendously.
It’s very easy to get stuck in a bubble when you trade by yourself all day. The psychological mess that we put ourselves through on a daily basis is insane and we can’t do it on our own sometimes. Talk it out, reset your mind and get back to the basics!