Taking losses in trading represents the final dilemma that every trade faces. We hate incurring them for a range of different factors, mostly because of the capital loss. But deep down, we also understand that they are very vital part of becoming a victorious trader. The key is to keep the losses little so they can support you become a winning trader as opposed to fully diminishing your trading account.
Like many traders, when you take your trading from paper trading to true money, there is a propensity to lose on a few trades in the starting because of the mental leap needed to adjust to the change. The included emotional distress of having true money on the line tends to cause us to stray from our confirmed trading plan a few times before we finally come back to our senses.
Unluckily, what happens most of the time, is trade will take too big of a loss in the starting because of their overconfidence developed from their victory in paper trading and will put much more capital in single trade than their trading plan says to do. This either result in fully eliminating or quitting their trading capital.
Because of this, many traders never permit the process of losing to bring them to a location of winning. But how can little losses actually make the stepping stones for winning trading? To reply that question, let look at a psychological term known as “desensitization”. Wikipedia describes this term as the following:
“The diminished emotional responsiveness to an aversive or negative stimulus after repeated revelation to it.”
Reaching a state of desensitization is a vital stepping stone on any trader’s path to victory because the lack of any type of emotional feedback towards trading leads to a larger following of the verified trading plan. Once you can get to that location of following your verified trading plan without question, you are golden. Prepare yourself for money freedom!
How do we get to this location of “desensitization” through? In little, get the initial few little losses out of the way. Now that does not mean to take losing trades on objective. It only means to admit the possibility of your initial few, true money trades being little losses that will support take your trading to the next stage.
Now the key word in this idea is little. It is vitally vital to always keep any losses little. Anyway, it is even more important in the starting when you make the leap from paper trading to true money. The factor is because with the probability of encountering a losing streak superior than usual, you don’t want a stream of defeating trades to wipe out your full account. The trading point is to stay in the game and earn money!
The few little losses you take in the starting when you initial trade true money work to desensitize you to the expected losses you will take in your trading career. The concept is to learn how to detach yourself from the outcome of the trade, as fast as easy. So in reality, you are not trying to earn money, you are trying to stick to your trading rules.
When you no longer have an emotional link to losses, you are then capable to detach yourself from the result, and make trades based solely on your trading idea. Your capability to maintain discipline and make best trading decisions will no longer be affected by past defeating trades. This is the final freedom every trader should struggle for.
With the passing of time, put aside the exciting hope of earning millions in the stock market. Instead, target on desensitizing yourself to the trading procedure so that you will be capable to stick to trading rules that will finally bring you the fortunate you seek. It is only when you reach this stage that accumulating wealth through the stock market will come.
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