Successful Day Traders Make Money Taking Losses

trader psychologySuccessful traders understand the importance of taking losses by minimizing  them.

When a trade doesn’t follow through, I exit my position with as little damage as possible.  No ego here. Wrong is wrong!

No trader makes money all the time, and the best traders in the world are successful because they know the importance of accepting and taking trading losses.

If one-third of your trades are winners and one-third are losers, and the remaining third were negligible then perhaps you can see the importance of controlling your losing trades. Taking trading losses are necessary and essential to successful trading.

I know I’m trading well if my biggest winner was three times the size of my biggest loser (3:1 risk/reward)

I have watched some of the best traders in the country trade over the past 23 years,  and the common pattern I see with all of them, is that they focus on managing their losing (red) positions far more closely then their wining (green) trades.  We are successful and profitable because we TAKE OUR LOSSES when it’s time to do so.

Of course, many of you reading this will find a reason to hold onto your losses well past the proper technical exit price. This will inevitably cause you to fail at trading and part of the unfortunate statistical base of losing, non-disciplined traders.

You can do it your way or better yet, the right way. Taking losses is the key to making money.

About the Author

Pete is a full-time trader and mentor since 2000. Author of Equity Trader 101 and the Order Flow Method. He is dedicated to help self-directed traders to bust through the six-figure level.

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