How to Recover and Get Back to Smart Trading After a Big Loss

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What’s happening traders? If you’re reading this, chances are you’ve experienced the gut-wrenching, sleepless nights that come with a big loss or a series of losing trades. Trust me, I know how it feels. Not too long ago, I found myself in the same boat, staring at my screens and wondering where I went wrong. But here’s the thing, losing is part of the game, and how you bounce back is what truly matters. I am just coming off a break from trading and made mistakes my first day back like a rookie would do, so I am writing this post as not only a way to teach you guys, but to also remind myself of my own trading rules, which I broke pretty much every single one of them the other day. So maybe together, we can figure out how to recover from those losing streaks and get back to smart trading.

Accepting the Loss

First things first, you need to accept the loss. It’s easier said than done, but acceptance is the first step to recovery. Acknowledge that this happens to every trader at some point. Remember, even the legends of trading have their down days. This doesn’t make you a bad trader; it just makes you human. So take a deep breath, give yourself a moment (or a day) to process, and then let it go. Dwelling on it will only cloud your judgment and prevent you from moving forward.

So after my losses the other day, I literally had to say “F*CK IT”, kicked myself in the butt for a few minutes for breaking the rules as I knew exactly what I had done after it was already too late, and got up from the desk. But, hey, sometimes you just have to move on. For me, I started tinkering with more 3D printing and got my mind off of it.

Analyzing What Went Wrong

Once you’ve accepted the loss, it’s time to dive into the details. This isn’t about beating yourself up but about learning and improving. Look at your trades and ask yourself: Were there any common factors in the losing trades? Did you stray from your strategy? Were you too emotional? Did you overlook any critical information or market conditions? By identifying what went wrong, you can start to understand how to avoid similar pitfalls in the future.

For me, I was playing off the Ethereum news about possible ETFs passing. The price was pumping and yes, I caught a bit of FOMO and jumped in. Had a great win on the first trade, got cocky, and then lost the next trade. After that, I revenge traded to try and make back the loss, and that was all she wrote. On top of it, I removed my stop loss like a complete idiot, so I deserved to lose that money. I know I talked about this the day it happened in a post, but it is relevant here too. So, you do need to revisit the trade, figure out where you went wrong with a clear head, and then get back into the markets.

Refining Your Strategy

After analyzing your mistakes, it’s time to refine your strategy. Sometimes a small tweak can make a big difference. Maybe it’s adjusting your stop-loss orders, or just keeping them in play in my case, using a different time frame, or simply trading smaller positions until you regain your confidence. The goal is to create a more robust plan that accounts for the lessons you’ve learned. It’s all about continuous improvement. There is always an area of opportunity in the trading world, we just have to find those opportunities and put them in play in a smart way.

Embracing the Right Mindset

Trading isn’t just about numbers and charts; it’s also about psychology. After a big loss, your confidence can take a hit, which is why it’s crucial to work on your mindset. Practice patience and discipline. Avoid the temptation to chase losses with impulsive trades—that’s a slippery slope. Instead, focus on staying calm and sticking to your refined strategy. Remember, trading is a marathon, not a sprint. If your mind isn’t fully in the markets, it’s best to just sit out until you can get your thoughts together. Trading is like going into battle, and you need to be at your best.

Taking a Break if Needed

Sometimes, the best thing you can do is step away from the screens. Taking a short break can help clear your mind and reset your perspective. Go for a walk, spend time with loved ones, or dive into a hobby. When you return to trading, you’ll do so with a fresh outlook and renewed energy. Even though I took a bit of time and still came back to making rookie mistakes, means I may need a bit more time to get my head straight and deal with some outside distractions before I really get back in the game. This will keep me from losing what little money I have to trade with.

Learning and Adapting

Every loss is a learning opportunity. Use this experience to become a better trader. Stay updated on market trends and news, continue educating yourself, and perhaps find a mentor or join a trading community. Sharing experiences and getting insights from others can provide valuable perspectives and prevent you from feeling isolated in your journey. I have recently been able to find a mentor in my cousin who is a 30+ year financial advisor, so I have had someone to bounce trade ideas on. It’s good to have at least one person you can talk to about your trades. If not, then you will just sound like a crazy person to the rest of the world, haha.

Rebuilding Confidence

Rebuilding confidence takes time, but it’s absolutely doable. Start small with your trades and gradually increase as you see positive results. Celebrate the small wins—they’re stepping stones to regaining your full confidence. Keep reminding yourself of your past successes and the progress you’ve made. Think of baseball, base hits are just as important, if not more important than homeruns, so don’t forget to cheer for those singles or doubles, then you’ll end up loading the bases for that grand slam, and it’ll just feel good.

Moving Forward

Finally, keep moving forward. The market will always have its ups and downs, and no trader wins 100% of the time, hell even some of the best traders only win 50% of the time, but they know when to ride their winners and cut their losers. What sets successful traders apart is their resilience and ability to learn from their losses. So, dust yourself off, get back in the game, and remember why you started trading in the first place. So now, just get out there and trade logically!

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Disclaimer:

The information in this trade journal is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.