Whether you are a trader or an investor, it doesn’t matter.
One of the hardest things to learn is to take a loss. Losses are part of the trading/investing business.
It’s nothing to be ashamed of. You have to work your plan. (you do have a plan don’t you?) Sometimes it doesn’t work out. Sometimes it doesn’t work out several times in a row.
But you have to learn to take a loss and move on… or Mr. Market will rip you apart…nothing personal.
It doesn’t care about you, your family, your home, or your retirement plan.
One of the greatest books on trading is Reminiscences of a Stock Operator by Edwin Lefevre. It was dedicated to Jesse Livermore and is supposedly a fictionalized account of his early and rising years.
Ignore the fact that the time-frame for this was at the beginning of the 20th century. There is so much insight buried in this book that you should read it several times. Your mind will always pick up something new.
So back to one of the hardest things to learn. Here is what Livermore says in the Reminiscences book,
“Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocketbook and to the soul.”
So, take a loss, learn from it…and move on. There will be another trade and another day. For more on trading psychology read this post from last December 16.