There is one absolute truth that everyone needs to know; there is not a single trader out there who has never made a loss throughout their trading career. Whether it was because of technology meltdown, lack of emotional intelligence or discipline, lack of education, a wrong series of education or just plain and simple bad luck, every trader will have to deal with a loss at some point, or even several losses. There is no denying that losing can be an unpleasant experience and it will leave every trader disappointed and shocked, especially if they tried their luck in a demo account and did well in it.
Lots of traders out there end up quitting altogether after they have suffered losses in the market. Therefore, it is of the utmost importance that you should know how to deal with losing money in trading. Just because you have lost money in trading doesn’t mean that you should leave. It is quite possible for anyone and everyone to bounce back after a loss. Talking about this is important because losing money often prompts people to question themselves. You will question yourself, your career choices and your level of understanding, which can drive you to quit, skip trades because you are afraid of losing again or getting into more trades than practical in your aim to get your money back.
It is not that difficult to bounce back after a big loss. There are a few things that you should do if you have lost money in trading. Obviously, it is not possible to turn back time and get your money back, but there are ways that can help you recover by repairing the mental damage you have suffered and the confidence you have lost. How? Let’s take a look:
- You need to ruminate
If you have lost one trade after the other, it might be time for you to take a break and think for a minute. First, you need to ask one important question; is trading really for you? Trading can be a huge challenge for the inexperienced individual, and even those who do have experience, will end up crumbling in defeat. Consider the traits that are needed for an investor to trade successfully. One needs to have a love for meticulous and analytics, along with steady emotions. Also, you should have a knack for numbers because dealing in the financial markets means being involved in one form of math or the other. Trading is not just about clicking and buy and sell orders and can often lead to failure.
Apart from that, timing is also of the utmost importance. If you don’t have a proper plan for opening and closing trades, your emotions will take control and they can derail a perfectly winning trade. Hence, if you have zero patience for planning, it is better to quit because it will not work out. It is also possible that you lost money in trading because the asset you are trading is not suitable for you, or the time-frame may be a little too fast. You should take some time to contemplate
- It is time to reassess
When you have lost money in trading, it is a good time to consider is whether you are losing because you are not following your strategy religiously. You need to ensure that your strategy comprises of rules that are aimed at mechanically truncating bad trades or automatically capping off accurate profit targets for preventing wild price swings. If your strategy works in backtesting sessions, then it is possible that you may not have followed the rules in actual trading or your strategy may no longer be viable. It is time for you to reassess your strategy.
The best way to go about it is by going over your trading history and trying to highlight your mistakes and errors. If you don’t want find any, then you should back-test your strategy again in recent data and then record the results.
- Read as much as you can
There are hundreds of people in the market who lost money in trading because they are just too eager to get started and too lazy to learn. They are excited when they make some quick profits via the demo account and are just ready to put real money at stake. But, if you are serious about trading and want to make it a full-time or part-time career, then you need to absorb as much information as possible in order to survive. There are lots of resources out there, which can help you in gaining a better trading perspective and you should allocate some time to study and learn from them.
- Keep your emotions in check
If you don’t have an even temperament and cannot stay in control when things go south, then trading really isn’t for you. You will be penalized by the market for your volatile emotions in the form of hefty losses. Moreover, your actions that don’t have any logical reasoning behind them will eventually become regrets. You can find stories about people who lost money in trading primarily because of their emotional instability. If you don’t keep your emotions in check while trading, you are only going to increase your losses instead of controlling them.
- Hire a recovery service
Not all losses are because you have made a mistake; some people have lost money in trading because they were scammed by brokers. There are numerous scam and fake schemes and brokerages out there and traders often fall into their trap. If that happens to you, it is a good idea to hire a service like Money-Back, which specializes in helping people recover their lost money. They specialize in assisting people when they have been scammed out of their hard-earned money and you can use their services to make a recovery.
Taking these steps can go a long way in helping traders get back on their feet after they have lost money in trading and have become demotivated and discouraged.