The Daily Market Forecast... Why you lose.

Thursday’s Blog Results: No buy fill. The short @ 4497.75 ran for 21.25 points with only 1 point of adverse move.

Quick Tip: Why you lose.

Seems odd that loss would be the topic after posting a nice winning trade. But it’s more important.

Losing trades are inevitable. In fact, losing streaks are inevitable. Drawdowns in equity happen. The challenge everyone faces with losing is your belief system. We are hard-wired from early on to think losing is bad. Not so in trading. Losing BIG is bad. Losing because you didn’t follow your trade plan is bad. But losing at your pre-determined stop loss is GOOD.

Why? Because you only lost what you can truly afford to lose both financially and psychologically. It should be “no big deal.” Your losses should never get you anxious, upset, or reactive. If they do, there are only three reasons:

1. You’re risking too much money.
2. You have no confidence in your strategy rules.
3. You aren’t following your strategy rules.

You need to fix all of these.

1. Determine the “risk number” you don’t mind losing. Divide it by 4 or 5 (for losing streaks) and start trading with that risk. You can adjust this number as your performance varies. Risk less when your strategy is struggling and more when it’s firing on all cylinders.
2. Trade strategies that have edge. Better yet, find a team to trade with. Going it alone is way more difficult.
3. Start a “thought journal.” Make a note about your feelings on every trade and log any deviations from the rules. Review it regularly.
4. Click here to review the Ultimate Trading Plan mini-course video. You might find you’re missing something in your current plan that is critical.

Today’s Best S&P Futures Turning Points:

Short Level: Sell 4562.00 stop 4467.50.

Long Level: Buy 4470.50 stop 4465.50.

Trade well,

Mike Siewruk

P.S. Does your trade plan need a tune-up? Watch the Ultimate Trade Plan mini-course (free). Click here.