“DON’T LET IT BURN YOU TWICE” is a lesson every trader should keep in mind all throughout their trading journey. It’s in our nature to emotionally react to situations when all else fails against us in the stock market. But, what does it mean to “Not let it burn you twice?”
When we encounter a fail trade, we become overwhelmed with emotions that may lead us to:
Not follow the original trading plan
Your plan has already failed but you’re still hoping that prices will go back up and favor your way. Always remember, HOPING is not a trading strategy. This will only further wipe out your hard-earned profits or worse, your capital.’
Force more trades to try and make up for the loss trade
You can’t accept the fact that you lost your previous trade. To make up for it, you’ll force an impulse trade to try and generate profits without a solid plan of action. If luck is on your side, you’ll win the trade. But reality is, you’re placing even more risk to your portfolio.
Be demotivated and give up
The worst possible scenario is for you to become demotivated and give up after a failed trade. Trading is a difficult process and even the most successful traders incur losing trades. Remember that the biggest difference between winners and losers is that the former don’t quit and they continue to fail until they succeed.
How do we keep ourselves motivated and stand back up after experiencing failure? Here are a few tips that could help you stay on your goal:
Focus on yourself
Traders tend to compare themselves with other professional traders who earn large sums of profits. Remember that most successful traders have their own stories where they also incur large losses but only choose to share their profits to the community. So instead of wasting time on others, focus on yourself and be patient in your success.
Take a break from trading
It’s not wrong to take your mind off trading for a couple of days. Give yourself a short vacation to relieve yourself from all the stress and frustration your body has taken from trading. Remember that overtrading can cost you your portfolio as you start to make less sound decisions on your trades. Once you come back from your break, you’ll be trading at your best self physically, mentally, and emotionally.
Remind yourself of successful trades
We tend to only focus on the bad trades because those are the ones that hurt us the most. This puts us in a negative mentality that our entire trading journey is completely downhill. But, if we shift our mindset and constantly remind ourselves of the excitement and joy we felt as we made those profitable trades, it motivates and encourages us to make more of those in the future.
Go back to your goals
One of the most effective ways to get yourself back on your feet in times of failure is to go back to your goals and ask yourself why you started trading in the first place. Traders tend to fall off course because they forget the goals they set when they first started trading. Worst case scenario? They stop trying and leave the goals they were very excited to accomplish.
Don’t let a small setback stop you from moving towards your goals. Remember that a goal is like a target, it’s not always easy to hit. But after a couple more shots, you’ll eventually hit a bullseye.
Learn and unlearn
It may sound counterproductive to learn and unlearn. But the truth is, it is much more effective to unlearn old knowledge and replace it with new ones. Think of it as a hard drive with only a limited capacity. The only way to inject new files is to delete old and useless ones.
Start unlearning the old and bad knowledge and replace them with better ones to improve ourselves as traders. Ask yourself “What are my common mistakes and what strategies do not work for me?” Once you’ve gotten your answers, find alternatives to your strategies and implement them to improve your trading set up. If you’re interested to learn more about trading for free, check out Investa University!
Understand what motivates you
There is no “One Size Fits All” tip for motivation. Everyone has their own personal techniques on how they motivate themselves when they fall hard. Remember that the person who knows you best is yourself and understanding what motivates you will keep you consistent and on your feet throughout the journey.
We hope that these tips will help you in your future trades!
