As a trader, making a substantial loss is one of the worst things that can happen to you. The main reason is that it can, of course, cause a significant financial upset, especially if you were trading on the margins or using leverage; however, it can also lead to a psychological consequence. It can create a sense that you’re not as skilled in the trading sphere as you thought you were, for example, and can cast doubt on your self-worth. But the good news is that there are ways to bounce back from this.
By giving yourself a break and the space to reflect on what happened, you’ll be able to come back to your trading game with a stronger and more resolute approach. Here’s how to do it.
As a newbie trader, a significant loss can leave you feeling disheartened – and almost as though you can’t bounce back. However, it’s important to remember that even the most experienced traders make mistakes from time to time. It’s unlikely that any trader who has ever opened an account can claim that they’ve made the right decisions all the time. As a result, forgiving yourself is a wise move – and is a good way to get back into the right mindset to make good decisions in the future.
Learn from your errors
But that’s not a free pass to make no changes whatsoever. In fact, now’s the time to ensure that you update your trading knowledge and skillset. For example, if you made a strategic error as part of your loss-making, it might be wise to now do some research into how to prevent that from happening again.
Remember: investing time in learning how to avoid mistakes might feel like a waste of time right now when you could be out there trading, but it’s worth it in the long run given that it’s often what’s needed to prevent problems in the long term.
In some cases, it could even be worth moving from the “live-action” mode of trading with real cash to the demonstration mode. That way, you’ll be able to practice your new-found strategic trading moves and learn the ropes of market trading without having to worry about making further mistakes. Often, brokers will offer this demo mode option for free – so be sure to have a good look around your trading account in order to find the option to try this out.
A spot check
A trading failure is as good a chance as any to make sure that you are in the best possible position when it comes to your overall account health. If you’ve been with your broker for a long time, now’s a great opportunity for you to think about making a shift to one who can offer a better service or a more cost-effective fee structure. Reading this eToro review is a great way to see what’s out there, and to contextualize your current broker offer with the alternatives.
And it could also be a good time to think about what asset class you’re committed to and make moves towards exploring others. If you’ve long since been a crypto expert now might be the time to think about looking into forex. After all, there are opportunities available in every market, but it’s up to you to take the bull by the horns.
Accept the reality
Finally: even once you’ve made the moves to deal with your trading error, you have to accept the possibility that a mistake could – and may even be almost certain to – happen again in the future. The markets can’t be gamed, and you never quite know what’s around the next corner. By educating yourself and ensuring that you have a self-forgiving mindset it’s possible to ensure that the next error you make might not be quite so damaging as the most recent one.
Making a loss when you trade can be devastating – and it can really hurt your bank balance as well as your pride. But there are plenty of ways to get over it and get your trading game back on track. Whether it’s ensuring that you give yourself the time to overcome the mistake or simply committing to doing some research into trading strategies as you go forwards, there are several options. Remember: no trading mistake is irreversible!
Interesting related article: “What is a Trader?“