Our Money In The Bank trades had a serious setback yesterday. The other strategy with NIFTY top 10 stocks did okay for the day and option buying too was alright.

Market is closed today. We shall talk about yesterday’s events in tomorrow’s post.

For today, let us discuss the issue which we face quite often with different responses.

How do you recover your morale after a loss in stock trading ? :

A big loss in the markets is a great lesson.

It hurts like hell.

It shatters your confidence.

It makes you fell worthless and causes a doubt about the methods and strategies which were profitable till the previous day/week/month.

If one is a trader with a small capital, it restricts trading capability.

It is important to recover from this situation.

A positive frame of mind is important.

The question is about getting back to this positive frame of mind by recovering your morale.

Let us come to this point now.

Start with A Review :

Keep faith in your trading methods ( if they have worked earlier ) and review your trades.

A particular stock or the whole trend went against you and you kept waiting while the losses mounted.

This is the only way to incur big morale sapping loss.

It happens to you, me and everyone else.

It is a mistake and we all make mistakes.

Everyone knows that tobacco products are harmful but the balance sheets of tobacco companies are fantastic.

All of us know that hoping against hope and waiting for the market to give us profits from a wrong situation could be dangerous. We still do it.

Analyse the trades as to what caused the loss.

Make a decision not to repeat it next time.

This step is really very simple. You will know what caused the loss within few minutes. In fact you are already knowing, this step is just to confirm that knowledge.

Do not blame the markets and plan revenge trading :

Be a believer in the tenet:

Markets are always right. We have to follow the trend.

It never pays to try to prove the markets wrong and increasing the trade size to get even.

That may work but if we fail, we shall be deeper into the trouble.

Read About Successful Traders and revisit your own recovery from loss if there are previous instances:

I would recommend reading the following books from time to time and specially when the morale gets down.


These books will help restore the confidence.

Reduce the position size :

For a few trading sessions, trade with a reduced position size.

Reduce the number of trades till the confidence returns.

The return of confidence will be dependent upon your reading, review of trades and your comfort with the present cash situation.

Once you are in the groove and find the winning touch, get back to earlier position sizes.

But do not exceed the normal position size.

Taking A Break :

A few days break from trading can be very helpful.

Trading is a stressful activity even while making profits. It is doubly stressful when losing.

A break will relieve that stress and help in restoring the confidence once you are back to your desk.

Talk with other traders:

Talking with other trader helps.

Most of the traders are lonely warriors. They do not have anyone to share their victories or woes.

They enjoy alone and they suffer alone.

I have found talking to other trades very useful specially when my trading is in the red.

These talks correct your perspective, keep you grounded and are an escape from the pent up frustration that comes from losses.

The experience of other traders can help in improving the strategies also.

It is a great morale restorer.

To Conclude :

Losses are an essential part of trading.

We can not totally avoid them but can learn from them.

Do not worry about losses.

The greatest of traders and investors also make losses at some time.

Learning your lessons should always be the priority.

I follow all these steps whenever the morale is low and never give up the belief that a big profit is just around the corner.

The only requirements are this belief and the right trades.

I hope it answers the question.

Thanks for reading.

Image Source : Google Images

Originally posted on Quora on December 21, 2017: