How to win by losing

Nobody becomes a trader with the intention to lose. Everyone wants to win.

That's why new traders focus so much on trade entries -- they want to start winning right away.

But that's misguided, because you don't start by winning. Winning is where you end up, not where you start.

Where you start, is by losing.

Most people never learn how to lose well, because they don't want to lose at all. Intellectually, they know they can't avoid losses. But emotionally, losing still hurts.

So when they lose a few trades, amateur traders immediately assume the worst: that their strategy doesn't work. Then they bail on it to look for another strategy that doesn't hurt.

But guess what? No such strategy exists. All trading strategies will hurt at one time or another.

The real question is, can you handle the pain?

Remember, humans haven't evolved built to handle loss well. Our ancestors survived by not taking risks.

In trading though, survival isn't enough. You need to win.

Before you can win however, you'll need to take risks. And if you take risks, you can't avoid losses.

The bottom line is that before you can be a winning trader, you need to be able to handle getting hit, and getting hit OFTEN.

Build emotional resilience​

The fastest way to train yourself to lose well, is to risk the smallest possible amount on each trade: 1 micro lot.

Start with that, because it hurts the least when you lose.

Over time, as your trading improves, you can slowly increase your trade size to build emotional resilience to bigger losses.

Once you can handle the emotions of losing, that's when you're ready to start winning.

- Chris Lee​

P.S. Tomorrow: why you're wasting your time with demo trading (look out for my email!)