Featured Article

Win or Lose, It’s Really Ok

samseiden
Sam Seiden
Online Trading Academy, Chief Education, Products, and Services Officer

My entire life I have been involved in sports. Ice hockey is for sure my first love, but I enjoy competing in just about any sport. Obviously, when competing in sports, the goal is to win. Everyone says the most important thing is to have fun but let’s face it, losing is not fun. When competing in just about anything, the goal is to win as often as you can and if you don’t, it’s not really ok. Whatever your position is on this topic what we can probably all agree on is that losing never feels good.

Free WorkshopTrading on the other hand is a form of competition that has an interesting and unique difference. Losing is not only “ok” but it’s actually not avoidable. Furthermore, you can actually be successful trading where you only “win” half the time or even less and still be considered a big winner. I find that people in general have a very hard time accepting that fact. We are brought up to win, succeed and not lose or make mistakes, so losing is not something people can easily get comfortable with. Before I go too deep let me define this a bit further. With every trade or investment there are four possible outcomes. You can have a small win, big win, small loss or big loss. As long as we make sure we eliminate the big loss from happening, we can certainly live with the other three.

S&P Futures Income Trade: 1/28/15. Low Risk Profit: $2,500.00

sseiden 20150203 - S&P futures-income-trade-20150128

Last Tuesday it was later in the evening and I was getting ready for bed. There was a strong supply level in the S&P that was also on the Supply and Demand Grid service that we provide for our Mastermind students from that day. As the evening went on the S&P was slowly rallying and making its way back to the level where I wanted to sell short. I have always been a very early morning person which means I don’t stay up too late at night, so I had a choice to make. Should I go to bed and hope the trade has not met entry by the time I wake up so I can still take advantage of it? Or, should I put my entire order into the platform and give the trade a chance to execute while I sleep? Meaning, putting the entry, stop, and profit target into the market as one order. The answer really boils down to your comfort level. Having been a market speculator for so many years, I know that one of three things is going to happen. The trade may not meet entry. It may meet entry and I take a small loss. Or, it may meet entry and I end up with a profit of more than I was willing to lose. The key is, I am perfectly ok with either outcome because I know that all three are ingredients to a profitable strategy.

The trade executed while I was sleeping and achieved the profit target or $2,500 before I woke up. I always sleep well and that night was no different because there was really no possible outcome that I would not have been ok with. Had the trade not worked out and I lost money, I would have woke up just as happy because it’s ok to lose. As someone who loves to compete, and loves to win even more, the whole concept of losing didn’t come easy for me in trading. Once I clearly understood that losing is part of a profitable strategy, however, it became very easy to deal with. Also, as much as you can’t let losses effect you, you can’t get too excited about the profitable trades or “wins” either. That morning was a good example. I was much more excited about the fact that it stopped raining and I could start my day with a nice run outside than I was about the $2500. I happened to be in California at the time, if you’re wondering how it could rain in January.

Hope this was helpful, have a great day.

Sam Seiden – sseiden@tradingacademy.com

Disclaimer
This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.