Everybody loses at times, it comes with the territory. Anyone tells you otherwise is blowing smoke. When I first began trading losing was a daily occurrence that eventually led to a loss of self-confidence. After all, a stock can only go up or down so I had a 50/50 chance, right? Not exactly, but you get the idea of my mindset back then. Sadly my thinking wasn’t unique back then or now.
The key to taking a loss for me was to have a plan in place before I pulled the trigger. I knew exactly what I was comfortable losing should the trade go awry. Now this wasn’t some arbitrary number that I threw out but rather a price that was in line with a technical level. I use a multiple of the ATR along with that technical level to manage most trades and that strategy has worked well for me.
By simply writing out my target and stop (amongst other things) before placing a trade I became more mechanical in my trading. If my loss target was hit I moved on to the next trade then processed the losing trade later in my journal. Losing sucks but what really sucks is losing more than I should by not following my rules. The mental baggage that will be carried from knowing better yet lacking the discipline to do so, my friends, is the real damage from a loss.