Everyone that trades, bets or gambles loses. The best sports traders, the best sports bettors, the best poker players they have all lost money.
It is inevitable that are some point you will go through a losing period and that is fine.
Leaning From Your Losses
The big difference between those that make money long term and those that don’t can often be a case of how they view there losses.
Losing trades and bets are things that a lot of people really struggle with. Losing money hurts and when people get hurt they tend to react emotionally.
You see it again and again on twitter or betting forums. Someone will lose a trade or a bet and say “I am never betting on (insert team name) again.”
Someone may make a losing pre race trade and then decide to stake 5 times there usual amount on the next trade to recover the first loss.
The bet or trade however may have been perfectly logical and had good value it just didn’t win that time.
This is a huge aspect of betting and trading that people struggle with.
The short term feedback you are getting from your bets/trades isn’t an indicator of your long term profitability.
Lets look a few ways to improve the way you view losing trades and bets.
1. The long term view
Taking a longer term view of your trading or betting is one of the best ways to remove the emotional up and downs of day to day wins and losses.
There is a great video by Peter Webb on having a longer term view of your trading/betting strategy.
2. Acknowledge beforehand that losing is a possibility
When you are making a bet or trade you should always try to estimate its probability of losing.
Many people seem to go into a state of shock when a trade or bet loses.
If you acknowledge the fact that your bet or trade can lose before you enter it you are not going to be shocked by the outcome.
3. Setting your stop loss and exit before you enter a trade
Having a stop loss/exit prepared before you enter a trade stops that dear in the headlights feeling you can get when a trade goes against you.
If you have already prepared for the possibility that you could lose it makes that exit trade a lot easier.
4. Losses help you learn
Having this data enables us to really break down where we are making mistakes and see where we might make improvements.
Even making small marginal improvements to your betting and trading can make a big difference in your profits.
It is usually only when we are losing that we can a step back and really analyse our results.