We all go through it. A bad trading day can make you question why you ever started trading, to begin with; but at the very least, it’s a chance to reflect on the decisions you’ve made, the trading behavior you’ve exhibited, and how to improve.
Hypothetically, suppose you trade around $1,000 a day for about nine days in a row. You’re feeling pretty good about your investments and gaining confidence in your trades. You’re doing so well, in fact, that you decide to take a shot at trading after hours on your 10th day.
You then lose all $9,000 that you made up to that point because you traded a stock that you didn’t know enough about. You bought a thousand shares of a stock that was down $12, and then when it went down $13; you bought another thousand, and then, before you know it, it’s down an entire $20, and you’re forced to sell.
You realize you were completely wrong about that stock, and now you’re down $9,000. The next day, you may be struggling with the idea to attempt to recoup your losses. Unfortunately, rebounding from losses is not always guaranteed when trading stocks. If you come out swinging trying to make up for that loss in a single trading day, you could end up losing another $9,000, and another, until you’re out of business.
What you need to realize is that losses happen, and they happen to all of us. So, how do you recover?
The next morning, when you sit down to start trading, you may want to reassess your psyche and your goals for the day. Reel in your personal $1,000 a day benchmark and get back to basics. Return to a modest number of shares, because even a relatively small profit the next day is progress. Try not to lose perception of how you began — that means starting small. Grind singles, don’t overreach and leave your ego at the door.
Realize that everyone is going to have bad days, and everyone is going to make mistakes; we’re only human. The key is to learn from those mistakes. Go back to what you know. If you’re an X number of share trader, rather than increasing to 5X shares to attempt to make up for the loss, consider decreasing to less share than your use to. By playing smaller and thinking defensively, you may be able to slowly recoup your losses.
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