Why losses are important in trading.

A large trading loss can be devastating — not only financially, but emotionally.

And I can with such confidence every trader on this earth has been there, we have all stared at the screen with such devastation. With a headache. And moral going through the floor. However, this is not the end, let me show you why.

As defeating as losses feel, how we react to loss that is more important than the loss itself. Inexperienced traders suffering a large loss can become hijacked by their emotions. Some may try to trade through the pain, denying it, often creating more turmoil for themselves. Some may withdraw, sweeping the loss under the rug to avoid thinking about it. Others may hunker down and try to “trade better,” determined to recoup the loss.

None of these reactions is constructive. In fact, they can be destructive if you don’t learn how to handle losing trades. Subsequent trading decisions are fraught with emotions that can drive erratic behaviour. Depending on the individual trader, they may cut winning trades prematurely, over trade, overstay unprofitable positions, or engage in other unrewarding actions — all done out of fear of another loss.

One major difference between successful traders and failed ones is how they handle trading losses. Successful traders treat losses as an opportunity to learn and…