“It’s better to lose face than lose money” – Golden rule of forex and stock investors
One of the golden rules of investors is “It’s better to lose face than lose money” – a rule that has been summarized by a professional trader after years of fighting. These rules also apply to ordinary investors.
Not making money is one thing, but losing the entruster’s money will probably not last a long time as a trader.
“Entering” the stock, foreign exchange, and gold markets and having a profession called “trader”, traders have to endure a lot of pressure. The pressure is of course to make money, because they are not only investing their own capital, but are also receiving investment entrustment from many others, but the biggest pressure is to preserve capital. Not making money is one thing, but losing the entruster’s money will probably not last a long time as a trader…
Therefore, one of the golden rules of investors is “It’s better to lose face than lose money” – a rule that has been summarized by a professional trader after years of fighting. These rules also apply to ordinary investors.
Rule 1: Research
Research carefully, then trade. Don’t trade and then do research. New traders are more excited to join the game than to sit on the sidelines and observe and learn. And the psychology of the insiders is that everyone wants to win, everyone thinks they will win but few people think about how to win.
Rule 2: Cut losses and accept wins and losses normally
You were wrong to buy that stock. If you’re already wrong, why do you want to be wrong again?
Cutting losses is a necessary action to preserve capital and is also an extremely difficult job for traders. No one wants to lose, but if you want to be successful in trading, you must accept that LOSING is a must. What we can do when we lose is reduce it.
The market doesn’t know you’re losing. The market trend (up or down) is determined by the thoughts of everyone in the game. As long as they change their thinking about the current market, the direction of the price will change, otherwise, it will still follow the current direction. It is impossible to predict when people will change their view of the market, and prices will change accordingly. Therefore, the “stop loss” order is a method of self-protection.
As a trader, you are like a soldier going to war. It is impossible to avoid injury. It’s just a matter of one time or another. People who are not influenced by emotions are usually the ones who have more chances to win. If you want to do this, the first thing is to trade according to your financial ability. When entering the game, don’t rush to think you will win, but think about the risks first. Ask yourself what if you lose, so you can mentally prepare and have a backup plan.
Rule 3: Discipline
Many times I missed the opportunity to win because that stock did not give enough signals that I wanted. At those times, it makes me ask a big, skeptical question about my methods.
There are also many times I ignore the principles to trade according to what I like, trade according to my emotions. But in the end, I found that only discipline is the way that brings me the most success.
Rule 4: Success and failure in trading are not due to correctly forecasting the market but due to “Lose less, win more”
Many people believe that success in trading is correctly predicting the market trend. Of course that is the first and most correct thing. But how many people always predict correctly?
We enter the market with losses lower than profits – That is the truth in trading. It is possible to lose 5 coins for each transaction, but regain 7 coins for the next transaction, the end result is that we have won. Therefore, the success or failure of a transaction is not as important as the amount of profit each time. You may lose 9 out of 10 trades, each time losing 1 coin, but in the last trade you gain 10 coins. Which one do you choose?
Rule 5: Have you ever suffered a loss in trading? If so, forget it. Have you ever made a profit in trading? If so, forget it even faster.
Traders do not have time to sit and lick their “wounds” or caress their personal pride. You should remember that money in or money out is the natural law of the profession. Your main job is to keep more money coming in so it can flow out. Don’t be sad when you lose, but don’t be happy when you win either. Being sad when you lose will make it difficult for you to recover. Being happy when you win can easily make you lose. That’s the truth of trading.
Rule 6: It’s better to lose face than lose money
Traders have no dignity. Many people buy a stock, realize it’s wrong, but still decide to sit in it until they win. They determined not to accept defeat. They value their dignity more than their money. This is a very normal human reaction. To be successful in this trading world, traders must do the opposite. They don’t need to know their reputation, they just need to know that if they make a mistake, they will immediately cut their losses. Making mistakes in the market is a natural thing. It’s strange that it’s not wrong. However, traders should distinguish between “face” and “waiting patiently”. If after buying, you see that the trend is completely contrary to your reasoning, the news and the price intensity… make you know that you are wrong, then it is time to run away. If you have bought but in the first moments, the stock price has not completely gone in the direction you want, and the loss is within the tolerance limit and the market has not had a definitive direction, then it is very likely that the investment mine requires some patience. The ability to distinguish these two concepts depends on each person’s personal experience and market acumen