How many times do you pass on a good setup for fear of a loss – creating reasons why that setup shouldn’t be traded?
How often do you move your stop loss when a trade is in profit, so the worst-case scenario is a break-even trade; or perhaps a few pips gained?
And, the last question, how many trades do you place, or not place, where you are concerned about being wrong?
For most retail traders, the honest answer to all those questions will be “more often than not”. For most professional traders, the answer will be “never”.
Trades have to be placed and managed without fear of loss. You can not possibly succeed as a trader if you’re trading with ‘scared money’. Losses are just a part of the business. Call them what they are: ‘losing trades’. They don’t need an excuse, or blame, or other names to lessen their effect.
The markets will always be random, often doing what you least expected, Their negative effect on your trading account doesn’t mean that you’re wrong, or have a bad trading system; or, more importantly, need to add additional squiggly line indicators to eradicate future losses. You will never avoid losing trades - attempts to do so will likely increase the occurrence of losses, until you eventually forget what terrific setups you originally had in your trading arsenal.
Of course, it's not just the fear of losing trades, that bother so many traders; it's also the fear of missing out. You think price is going to make a big move so you quickly jump in with a trade, even if it's not part of your plan or a known setup. So you have both a fear of losing and a fear of not winning.
If you find yourself having a losing streak, your initial mild fear will likely grow to the extent that it turns into aggression, in defence of your treasured account balance. And that’s where it all falls apart. Sound familiar?
The best trades, in my own personal experience, are the ones where you set and forget. You find a good setup, as per the rules of your own trading plan; you’ve already identified a high-probability price magnet; you put your stop loss in a logical place; you forget about the trade: accepting the outcome with the same grace for a loss as you do for a win. If you’re unable to do that, then you’re in the wrong game.
Trading should be like having your morning shower; brushing your teeth or making a cup of tea. It’s a relatively-mundane sequence of tasks that you do without subjective thought.