Learn From Your Losses–Here’s How
Throughout my
trading career I have always learned more from my losers than from my winners.
With some of the losers I have endured I should be pretty sharp by now. Last
week I posted a few charts of the major indices as they were approaching or had
already begun to test some significant looking trend lines. Here is the S&P to
refresh your memory:
If you decided to get long the market in a situation such as this which looks
like reasonable bet, make sure you’re long gone and even reverse your position
as soon as you are wrong with the trendline being broken as you were aware of
the technical level beforehand. Learn from the losing situation. To succeed in
the markets you must have flexibility to go along with discipline.
Being Wrong Is As Important As Being Right
The information gathered in a losing trade by being wrong is very valuable and
can help you trading. Whether taking a position against a support area as
discussed in the simple example above, or whatever your reason for taking a
trade, try to use every bit of information to create an advantage. Back when I
was making markets I had additional information such as order flow and customers
to key off and help in my decision making. Without that it becomes more
important to pick up every bit of knowledge from your losses.
Have a nice weekend,
Ken Levey