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Nick Goold

Do you know the difference between winning and losing traders?

The truth is that many traders do not understand this difference.

Let's look at some specific ways to become a winning trader.

Differences between winning and losing traders

The biggest difference between winning and losing traders is what they do after a losing trade. Losing traders cannot follow their trading plan after a loss. They only think about recovering their losses and immediately opening a new position.

In contrast, winning traders act differently. Even when they lose, they remain calm and continue to focus on following their trading plan. This is because they understand very well that there's no trading plan that can be 100% guaranteed to win.

Losing traders also know that they won't win every trade, but they cannot remain calm enough to act correctly. What you do after a losing trade is key to improving your trading.

It's easier to stay calm when you know that a trading loss doesn't necessarily mean that it was a bad trade or that you did something wrong. You can't predict the market with 100% accuracy, so even if you do everything correctly according to your trading rules, you can still lose money. A good trade can be found by looking back to see if you followed your trading plan to the letter.

This way you can understand how important it is to look back on the trade after closing the position. Looking back after a trade helps you to think objectively, which makes it easier to improve future trades.

Comparing winning and losing traders after taking losses:

Losing traders

✓ Enter the market first and hope to profit from the position.

✓ If the market does not move in the direction they expect and they are hit by a stop loss, they get frustrated and immediately think about trying to recover the loss with a new trade.

✓ Trade again, without being properly prepared, and lose even more.

Winning traders

✓ After entering a trade, they plan how they will react if the market moves in the opposite direction to what they expect.

✓ Remain calm when a stop loss occurs.

✓ Take a break and wait for the next entry timing, according to the trading plan, with a fresh mindset.

The main difference between the two, as can be seen from the comparison, is their mental state. Trading can be dangerous when you're frustrated and distracted. You should always appreciate that the market may move in the wrong direction. Therefore, having a clear stop-loss rule, and following it correctly, will enable you to recoup your losses over time.

When looking back after a losing trade, you should reflect on your state of mind. Trading is closely related to mental control, and improving your trading can be helped by improving your mental control. Being able to calmly think about the next trade, even if it results in a loss, is a great learning experience. Fresh thinking also gives you confidence for the next trade. Even if you suffer another loss, when you can control your emotions, it is the first step towards success.