Is Trading Loss Good For You?

hello guys david dexter welcome to this new youtube videos and today we're going to talk about different types of losses through my trading career i'm sure they will happen to you as well if you are into the training industry for about a year or two and i do categorize them in three different types of losses first one will be over treating loss second will be the essential losses you have to take if the pattern does not work the third one will be the revenge losses the last losses will be the biggest losses you have to

experience throughout your trading journey so before i start this video make sure to click the like button and subscribe let's get into the video so the first loss will be over trading laws now this type of losses normally comes after you traded about two to three months and you kind of know what's the market condition look like when you see a repeatable specific action every single morning and you tend to believe that it's some type of pattern all of the sudden you're sizing in into let's say a gap operator that doesn't qualify as a gap

up short but it worked for the last three to four times you kind of believe that today it might work again and you size in and you take a loss and of the sudden you kind of don't know what you're supposed to do and you want to make the losses back this is where that you tend to make a second trade take a second loss by the end of the day that you are not sure what pattern you traded that's normally where over trading come from it's normally come right after that you take the first

loss you don't know what pattern you're trading on the second loss is called essential loss this type of loss you normally take when you are trading an actual pattern that has a decent winning percentage for example let's say i'm trading a bounce short that has an average winning percentage of a 70 to 80 percent but that 20 of chance i'm still likely to take a loss then if i take a loss i call that essential loss those losses are pretty much unavoidable and normally you can keep a decent uh risk management on it so you

don't take more than seven percent losses on one trade so unlike any other industries that in trading you don't really have that many chances to really screw up because if you keep screwing up about seven eight times you're going to blow up your account and don't really have a second chance to trade again so you have to be really careful with what you want to trade and also be very aware of if the stock it tends to go out of your risk and how you're supposed to actually react from that so here i do recommend

give you guys one method to actually avoid that type of blowing up experience is if you made money now let's say you grow twenty five thousand dollar account to fifty thousand dollar account you want to withdraw half of it and put it into as a backup account so if you're trading a specific pattern but you failed about 10 times in a row and each time the chance that fails will be 20 that still has a chance to happen so if you have a backup account you can still come back from that as i said in

trading you don't really have many chance to screw up so that's why you don't put all the eggs in one basket and always keep one or two separate accounts to support your trading career so the last point will be revenge losses don't try it you underestimate my power these type of losses normally can wipe out your entire account now the first point i want to cover is there's ways to prevent that so first one you can do is you can call your brokerage and set up a max hard stop let's say on the day you

exceeded the 50 000 losses the brokerage will automatically cover for you so that's one thing you can do uh it's easy to set up but one thing comes in as a disadvantage is you cannot place a second trade sometimes you make the first mistakes and the second attempt normally be the right decisions and you have the potential to make the losses back this is where that it's not worth it because if you are already exceeding your max loss your second decisions normally are not very good that means you're not treating the correct pattern the pattern

doesn't have enough odds so that's one thing you can do to prevent max losses a lot of people doesn't really have that and that's why i see people tend to go into the market for two or three months and all of a sudden their account is empty because they hold and hope so for all the points as i said above normally trading losses are very good for your trading career so i do recommend that face your losses and admit your wrong sometimes and also try to learn from your losses to see what you can improve

in the next time so that will be all the points i want to cover today thank you very much for watching i will see you guys in the next one [Music]