Weekly Insights: How ADM Eases the Pain of Losing Trades
How “ADM” Eases the Pain of Losing Trades
Futures trading is the ability to accept losing trades as part of the overall trading process. This is not an easy undertaking — especially since many futures traders tend to be of a more competitive nature in the first place. Traders certainly do not have to enjoy losing trades, but they must accept the fact and move on. Those who cannot accept the fact that losing trades are a part of futures trading usually do not stay in the business very long.
A schoolteacher acronym (ADM) can be applied to losing futures trades. “Accept” it. “Deal” with it. “Move” on. (This is a part of the important psychological aspect of trading and deserves much more discussion than I can provide in this feature.)
I had lunch with one of my trading mentors a while back. We discussed losing trades. I asked my mentor how many losing trades in a row he has had to endure during his long and successful trading career. His reply was 13 — in a row. I asked him how he coped with that. He said that while it was certainly not easy, he knew that losing trades are a part of the business and that he was in the business “for the long haul.” He also knew that his trading methodology was sound. He added, “Ninety percent of futures trading profits are made on 10 percent of the trades, which means most of the other trades are either small losers or break-even-type trades.” This is an important fact for all traders to keep in mind.
My lunch meeting with my mentor was good for me because, even though we made no “breakthrough” discoveries on the path to increased futures trading success, we did reaffirm our own philosophies on trading and markets. My passion for trading and market analysis is fed immensely every time I talk with people in my profession or attend quality trading seminars.
For many of you, the futures trading arena can be more fulfilling (and more fun) if you have someone, or some support group, with which to share your thoughts and strategies. If you are passionate about futures trading and markets, finding someone who shares that passion is a great trading tool within itself!
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