If you want to become a complete trader who truly knows how to trade properly, you must learn how to lose properly in addition to actually learning how to trade. For the rest of you who truly want to have a chance of making consistent money trading the markets, read on…. All too often, I see beginning traders trying to avoid losses in a number of different ways. But, when it comes to trading, this pre-wired trait does us significant damage and will even result in blown out trading accounts and irreversible damage, if you allow it to.

The simple reality of trading, is that you are going to have losing trades one way or another. Remember; you can delay losses, but you cannot avoid them altogether, and there is typically a direct correlation between how long you delay a loss and how big it becomes.

Any business has costs that need to be overcome in order to turn a profit. If you own a restaurant you have operating costs like food, labour, rent, utilities, book keeping, etc. If your revenue surpasses all of these costs, you will turn a profit, if not, you lose money. The take away from all this, is the following: In order to lose properly you have to first prime your trading mindset to shift how you think about losses.

You have to shift from trying to avoid losses to trying to accept them and learn how to manage them. The first step to losing properly as discussed in the above section is accepting that you will have losing trades no matter what.

Once you accept this, you can move on to the next step, which is about devising a plan to minimize your losses as much as possible. Next, determine the dollar amount or R value you are comfortable with potentially losing on any one trade. Now, you need to calculate your position size on the trade.

You do this by first finding the best place to put the stop loss , and then you figure out how many lots you can trade so as to not exceed your predetermined R value on the trade. Set and forget the trade. After you have set the trade up and input all the parameters: One of the biggest steps to learning to lose properly is simply not interfering with your trades. This is where psychology comes in and can mess you up.

You absolutely cannot make huge mistakes like moving your stop loss further away as price approaches it. As I discuss in this article on risk management , a successful trade exit can be either a winner or a predetermined loser. Success is sticking to your plan and being disciplined. Please do not blow this lesson off, if you do, it will be the biggest mistake you make as a trader.

Trading is difficult for most people because they cannot come to grips with the FACT that they are going to have losing trades as well as winning trades. This monster is bad trading habits that ultimately lead to an account-destroying loss. To learn more about how to manage losses and build your own trading business, click here.

I believe in this writeup as I used to take my losses as part of the trade but also thinking that I am lagging. Now this article has buttress my belef and I will now stand by it. Thanks for the advice. Thanks for the reminder.

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Set and forget is so important. I am guilty of letting in recent 2 trades a decent 5R winner on the table by extending the profit target and then getting way less out of it. Now have a fix rule of taking 5R, when available.

In the past, I looked at my losses as a failure of understanding the market direction and a confirmation that I have no business trading. That I was just gambling my money away. Now I look at my losses as a strategic plan of capital preservation for another opportunity to trade again another day.

Success is not always winning, but taking a loss, yet allowing yourself an opportunity to win next time. Thanks Nial for another great read. This line in this lesson sums it up all for me. Mindset is the biggest part of successful trading!! Great to accept pre determined losses as a cost of doing business. However when your 2R TP has just failed to trigger. Do you scale out and at least make some profit or risk a losing trade?

Would mean of course tampering with RR. Thanks for any advice. I prefer to exit a trade at the take profit area or just before, and sometimes I will move the take profit further out to let a trade run and move stop to break even. These are the articles I never wish to miss, great write-up, success driven ideas.

I would say doesnt matter how much experience you got. If somebody not agreed to follow above information.. I agree with what you say. Not even Warren Buffet wins every trade. But when I take a loss on the MT4 demo, I take that loss just as seriously as if I was trading live with real money.

A loss is a loss either way. Nial,you are always precise. I have been in lots of trouble in the past trying to avoid loses!

Now I have decided to do things by the BOOK, not to disturb my stop loses, just to accept them as they come. Awesome power in your words. Totally makes sense what you say.. But doing the right thing in trading consistently for long enough, for me and possibly lots of other traders is. Hi Nial Thanks for this piece. Honestly after blowing up my first account, i almost started becoming afraid of loss but this article speaks volumes. Thanks once more, keep it up.

Thank for that, I was just saying to my wife this week that she needs to start looking at losses as a cost of doing business in the real world and not as being negative when we talk about the amount we are planing on losing…. This is a very good article and I understand it as I have blows my account three time already in the past by just not following the rules and going some of the above…..

Hi Nial, this is a brilliant article because i used to try my best at avoiding losses and ended up blowing my account 3 times!! Ive learned from all of that and now things are looking better. The article is very motivating thanks. Your email address will not be published.

Real Traders Learn to Like Losses

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Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results. Why You Need to Learn to Lose Properly to Win at Forex Trading By Nial Fuller in Forex Trading Articles 27 Comments. For the rest of you who truly want to have a chance of making consistent money trading the markets, read on… Prime your brain for losing properly… All too often, I see beginning traders trying to avoid losses in a number of different ways.

Traders experience pain and frustration from losers for two reasons: They lose more money than they are emotionally prepared to lose per trade. Final thoughts on losing properly… Please do not blow this lesson off, if you do, it will be the biggest mistake you make as a trader. Related Trading Lessons How to Bounce Back After a Losing Streak in the Market The Biology of Why You Are Losing Money Forex Trading.

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