Today's Quote: “We must all suffer from one of two pains: the pain of discipline or the pain of regret. The difference is discipline weighs ounces while regret weighs tons." - Jim Rohn.

Professional traders… Never have big losses that wipe out many good trades.

While this seems like common sense, it ranks among the top comments because this happens with tremendous regularity among beginning (and sometimes advanced) traders. Most traders go through similar stages in their development. As a matter of fact, all traders go through nearly identical stages in their development.

There comes a time when as a trader, you start to feel pretty good about your progress. You have learned some strategies and you have learned to perfect them pretty well. You are getting most of the trades right most of the time. So you are feeling pretty good. You can see things working just like they should, right in front of your eyes. There is just one problem. Your account is not growing.

Your next step at this point determines if you will be successful or not. Most traders don’t really investigate; they just assume things will ‘fix themselves’ as time goes on. Those who are more likely to succeed take the time to find out why they are only break even. At this point, it is highly likely that the trader is break even because of occasional big losses. They have several winners, and then one big loser wipes them all out. They think that it won’t happen again. But it does.

They ‘feel’ good, because they focus on the fact that they have had mostly winners. But the only way to improve is to discover how the losers happened. It is those occasional trades that remove all the profit that must be fixed. They always come from one of two things. Either not following a stop, or not having money management rules in place. Following a stop doesn’t help you if you replay the stock eight times in a row and lose a week’s profits.

Seems like commons sense, but take a look at your records. Run down a list of your profit and loss on every trade, and every day. Are there any numbers that ‘stick out’? If so, you know what to do.