How To Stop Chasing Losses

If there has ever been one aspect that I have beaten into the hearts of traders who have graced my website over the years, it is the need to use a stop loss order on every single trade that they take.

• How To Stop Chasing Losses In The Winter
• How To Set Stop Losses
• How To Stop Chasing Losses In The Workplace
• Stop Losses Meaning

They will keep you in the trading game, keep your losing trades within reason (assuming you aren't trading penny stocks, in which a stop loss order won't do anything for you), and it is going to help you consistently profit at a high rate.

When it comes to trading tools, stop loss orders are probably the most important trading aspect of making sure you do not blow out your account. You are using this order type to make sure that if the market decides to sell off and take all your positions down with it, that you aren't holding on until it feels emotionally acceptable to sell. Instead you have already drawn the line in the sand so that you know where to get out at, instead of relying on your emotions to determine that.

How to Stop Chasing Gambling Losses Have a Gambling Limit. It is essential to limit the amount you can use for gambling, irrespective of the number of times. Avoid Banking on Results While Gambling. Many people make the mistake of calculating their chances of winning through. 2 days ago  Random stocks. Think around 50 different companies. There’s only a few that I’ve (lazily) researched and actually believe in. Yes this was a mistake. I should have done research first and then bought, but I’m more of a jump in first and then learn how to swim person. I don’t mind the monetary losses. I can make those back up if I’m.

By using stop loss orders, you are also making a very important aspect of trading a very mechanical one and leaving your whims of emotions, that face traders daily, from getting out of hand.

So use stop loss orders, know before you even get into the trade what your stop loss will be and never lower the stop loss ever...on any trade. If you widen your stop loss once you are in the trade, you are making an emotional decision out of fearing that the market will take you out of your trade and then rally higher. That is a horrible excuse. Whens stops get hit, there are only two directions that a stock can ultimately take - either up or down. So yes, there will be a large number of stocks that will breakout higher after you get out. That is part of trading.

When it comes to using stop loss orders you must apply these four important tips:

• Use hard stop loss orders

• Use stop loss orders work best in tight situations

• Use stop loss orders to trail profitable trades and insure you keep the majority of your profits

• Use stop loss orders to protect you from yourself

Let’s go over each one.

Use hard stop loss orders

It is the belief of many traders that somehow they will always be in control. That they can also react fast enough or be around when necessary to take the right actions. That is simply wrong on all accounts. The first step to trading is recognizing that you are not in control. That the market does what it wants to do and that you do not have an opinion in the matter.

You can only react to what price does to the positions that you are in. Whether it is laziness, fear or overconfidence, many traders like to use mental stop-losses.

Please, PLEASE! Don’t do that!

Mental stops are bad news. They will eventually kill your portfolio and cause you to take bigger losses than what you would have ever expected to take.

They will also kill your profit/loss ratio.

Let’s say, for the sake of conversation, that you buy a stock at $100 and instead of using a hard stop loss order, you use a mental stop loss of $95. That mental stop-loss is hit. You put your order into sell, but buy the time your order to sell the stock is placed, you have seen the stock drop down to $94.80. Only twenty cents you say? Well do that consistently, and you are going to find yourself losing a lot of capital simply because you decided to use a mental stop instead of a hard stop-loss that will get you out of the position as soon as the stop-loss price level is triggered.

But even more dangerous than the scenario that I just laid out for you, is the fact that most people who use a mental stop loss order do not have the discipline to get out of the trade immediately when the stop loss is hit.

RELATED:3 Trading Strategies for Increasing your Stock Market Profits

In fact I would say the very fact that one uses a mental stop loss order is usually due to either a lack of discipline, or a lack of faith in one’s own trading methodology.

You see, when the stop-loss is hit at $95, the initial response by the trader is to see whether it just touches the stop loss and then bounces higher, because as you all know, we all hate having our stop loss be the low tick of the stock in a given trading session, only to watch the stock spend the rest of the day recovering. So as a result, we don’t take the loss, and that very approach by its own definition, means that you are willing to take a bigger loss, just to make sure your original stop loss wasn't the low tick.

Stop loss orders work best in tight situations

You don’t have to trade with stop loss orders that are ten percent away from your entry price. First, your risk/reward ratio is going to be very much skewed to the risk side. But more importantly, trading with tight stops will actually improve the risk/reward profile of your trading strategy that you employ.

When I trade in the Splash Zone, and when I am stopped out it is usually no more than about 2-3% with most of the timesit being somewhere in the 1% range. That means I can make at least a 2:1 profit on the risk when I profit between 4-6%. To duplicate that on a 10% stop loss order, means that you need to make 20% just to come away with the same profit/loss ratio.

Remember, the profits are in the risk-reward. If you aren’t profiting enough to cover the risk, then you simply are not profiting in your trading strategy. Keep risk tight and it makes profiting so much easier. But if you keep the risk large and the stop loss orders wide, then you will find profiting in the stock market a difficult proposition.

“But if I keep the stop loss tight, it makes it more likely I will lose on the trade!”

Who cares if you lose on the trade. That is part of trading. Get over it! If you stay in this game long enough, you will be stopped out regularly. It comes with being a disciplined trader.

Tight stops don’t mean that you will lose more either. A lot of traders think that if they profit 60% of the time on a 10% average stop loss that they will only profit 20-30% of the time with a 2-3% average stop loss.

That simply is not true. You see, tighter stops makes you look for better charts to trade and requires you to make better entries. That makes for a better trade all around. It keeps you from chasing stocks after their move is already well in progress, and makes you get in at the beginning of the move instead of the end of one.

With wider stop loss orders, you are more inclined to justify chasing price action because you have plenty of wiggle room with the stop loss and makes you less picky about where you get in at, because your stop loss gives you a higher tolerance of price fluctuation.

So keep those stop loss orders tight - you’ll profit more and more frequently.

Use stop loss orders to trail profitable trades and insure you keep the majority of your profits

Now I am not talking about using a trailing stop loss order. Far from it, I am simply saying that you should, as a position becomes more profitable, increase the stop-loss on it so that you can make sure that you walk away with a sound profit.

I am always looking for where I can, within reason, tighten my stop loss on a trade in order to reduce the risk, or to make sure I walk away with at least some profit on the trade.

But you have to be strategic about where you put the stop-loss at. You can’t simply go out there and arbitrarily place a 2% trailing stop loss on your trade, because as the stock grows more profitable, that stop-loss will eventually drift into areas of a chart that do not represent breaks of key support areas or a break of a key moving average or trend line. Essentially that stop-loss will be lingering in 'no-man's land'.

Instead, when I say you need to trail your profitable trades with a stop loss order, that means you regularly adjust the stop loss of the trade yourself. As the stock becomes more profitable, raise the stop loss to a key price level, that if touched, you will have a high level of confidence that the trade is deteriorating and going against you now. But it needs to be wide enough so that you can give the stock some room for normal fluctuations but still capturing the majority of the gains on the trade.

Yes, this takes much more analysis and work than simply placing a trailing stop on a trade, but in the end you want to be more profitable and that is the way you do that.

Use stop loss orders to protect you from yourself

There is another important reason why we use stop loss orders, and the final reason is not based on the technicals of a stock, instead it is based on the psychology behind the trade.

You see a stop loss orders protects you from yourself. That’s right - you me and everyone else has the full potential and capability of blowing up their account if proper risk management is not maintained and practiced on a regular basis.

If you don’t take managing risk more serious than profiting in the stock market, you are setting yourself for failure.

The best way to keep losses small is to use a stop loss. When you don’t have a stop loss in place, how do you know where to get out? How do you know when enough is enough. It is emotional decision at that point because you have to make the decision of whether to take the loss now, at the expense of the stock possibly turning around, or staying in the trade with the hope of eventually profiting, but at the risk of even losing more, if not everything.

At that point, you have to make that decision and the very fact that you are in that situation of having to decide means that you have let the stock lose enough capital that your emotions are dictating that you decide whether to sell, buy more, or simply stay in the trade.

When you have reached that point, you have already lost on the trade - plain and simple.

That is what you are preventing from happening. But that only works for you if you decide before you even get in the trade where you will place your stop loss order.

That is how you protect yourself…FROM YOURSELF.

Keeping it real with stop-loss orders

Using a stop loss order with every trade you make won’t completely eliminate disappointment with trading. There are plenty of things out there that you can do to hurt yourself when it comes to trading, but using stop loss orders is about 75% of the game when it comes to risk management. Fail to use them, and you will most certainly regret it.

I would also encourage you to sign up for the SharePlanner Splash Zone. Don’t worry, there is no commitment up front. You get to see me in action for free for the first seven days of your subscription. With it, you will see exactly what it means to manage risk, place those stops, and consistently profit along the way. I have been doing this for a long time, and I make my trades well known. Because I consistently manage risk with each and every trade I make, I put myself in a position to profit on a month to month basis while maintaining a very high win rate (63% so far this year). In doing so, I eliminate unnecessary losses, and make sure profitable trades remain profitable (who doesn’t like that!?!).

So sign up for your free trial to the SharePlanner Splash Zone. If you don’t like what you see, cancel at any time before the seven days are up. But this is the place to be if you are going to be serious about trading and making a serious income from the stock market.

You can do this!

One of the main things that make playing casino games so enjoyable and interesting is trying to work out how to improve your chances of winning.

The house edge doesn’t mean that winning is actually impossible; it just means that the odds are against you. There’s absolutely no reason why you can’t win money in a casino, and it’s certainly a lot of fun to try.

In games of chance, even when there’s some skill involved, the outcome is always unknown, and it’s the uncertainty of what will happen that ultimately makes playing so exciting.

Although the house is basically guaranteed to win in the long run because the odds are in their favor, there’s no guarantee that they’ll win your money every single time you play.

Equally, there’s nothing you can do to guarantee that you’ll win every single time. It simply isn’t possible. There are, however, some things that you can do to greatly improve your chances of winning each and every time you play.

On this page, we explain why self-discipline is so important and why it will impact your overall results. We also offer some tips on exactly how you can go about staying disciplined in the casinos.

How To Stop Chasing Losses In The Winter

There are a few methods that players employ to try to maximize their chances of winning. Many players spend a huge amount of time and effort studying strategies, for example.

This can definitely be beneficial in some games, as using the correct strategy does directly affect your chances of winning. The correct strategy will often put the odds in your favor.

To make using any strategy worthwhile, you need to stick to it. There’s no point in setting out to minimize the house edge, only to deviate from that strategy and take unnecessary risks.

You can have plenty of fun playing in a casino and still win without using any strategy at all. But if your aim is to give yourself the best possible chance of winning, then having the discipline to adhere to the correct strategy is vital.

Self-Discipline and Betting Systems

Discipline is also essential when using some kind of betting system. This is something that many casino players do. The majority of these systems fall into one of two categories: positive progression or negative progression.

Positive progression systems involve increasing your stakes when you win, and negative progression systems involve increasing your stakes when you lose. Many gambling experts will tell you that using positive progression systems or negative progression systems are a complete waste of time.

The important thing to recognize about these betting systems is that they won’t help you overcome the house edge. In terms of your overall chances of winning, they essentially have zero effect. This is largely why so many advise against using them.

However, we don’t believe that there’s anything wrong with using betting systems in general. They can be a lot of fun, and some of them can help you win a decent amount if you happen to go on a winning streak.

The downside, though, is that some of them can greatly increase your losses if you experience a run of bad luck.

Ideally, you need to put a limit on the maximum amount you’ll stake and stick to it; otherwise, you could lose a lot of money.

It’s our view that your best hope of coming out ahead when playing in a casino is to practice good money management. Your goal should ultimately be to maximize your winnings when things are going well and minimize your losses when they’re going badly.

To do this effectively, you absolutely have to manage your bankroll correctly.

When playing casino games, it’s quite common to go on long streaks of either wins or losses. There’s no logical reason why this happens, but it does. If you’re experiencing one of these streaks, then it’s important to recognize that they won’t go on forever.

It’s also impossible to know when a streak is going to end.

Players can get carried away when playing and forget this, which invariably leads to things going wrong.

Players will often keep on increasing stakes to a higher

and higher level when on a winning streak.

While in theory this isn’t a problem, you have to have the discipline to drop your stakes back down when your luck turns. Otherwise, you can give back everything you have won very quickly if you happen to lose a few big bets in a row.

Many players also have a tendency to increase their stakes when they’re losing in the hope that their luck will eventually change and they’ll win their losses back. This is a huge mistake.

Chasing losses is possibly the worst mistake you can make when it comes to gambling. There’s just no way of telling when a losing streak is going to come to an end, and your bad luck could continue for as long it takes you to lose everything.

You might get away with chasing your losses on some occasions, but it’s almost certain to end in disaster at some point.

Both the scenarios we’ve just mentioned can be easily avoided if you have the discipline to practice good bankroll management, although we do recognize that this can be a challenge sometimes.

When things are going well, it’s a natural response to feel like you can’t lose, and just keep on betting higher and higher. Equally, when things are going badly, it can be very tempting to keep betting higher to recover your losses.

In order to have the best chance of making money out of casino games, you absolutely have to have the necessary self-discipline. The easiest way to do this is to set yourself some rules so that you have proper guidelines to follow.

The first thing you need to do is decide how much money you’re comfortable spending in the casino, and then effectively allocate that as your bankroll.

There are no particularly hard-and-fast rules about how to manage your money from that point on, other than knowing to never chase your losses. You really should have some kind of system in place to prevent yourself from doing that.

A good guide is to set a maximum amount you’re prepared to lose in any one session and also set a limit for what percentage of your bankroll you can stake on any single bet. This will ensure that you’re unlikely to lose too much money if you do have a run of bad luck.

You should also set some kind of target for winning, and then stop if you manage to win that amount. This way, you can make sure that you don’t end up giving all your winnings straight back to the casino.

How To Set Stop Losses

Also, if you tend to increase your stakes when you’re winning, it’s advisable that you still stick to only ever betting a certain percentage of your bankroll.

If you really don’t like the idea of stopping during a winning streak, you can always just take a certain amount of your winnings off the table and then stop if you lose the rest of your profits.

How To Stop Chasing Losses In The Workplace

We have established that there are certain strategies you can use in some casino games to increase your chances of winning and there are some betting systems you can use that may help you make the most out of a spell of good luck.

The fact is, though, there’s basically a zero chance of you finding a strategy or system that will enable you to beat the house consistently.

The only way you’ll ever get the best possible results in a casino, regardless of luck, is if you have the discipline to manage your money properly.

You have to try to maximize your winnings and minimize your losses, and knowing when to quit, or to at least reduce your stakes, will give you the best chance of accomplishing that.

You’ll still need luck on your side, and there will almost certainly be plenty of times when it isn’t.

Stop Losses Meaning

However, with good discipline and bankroll management, you should be able to make the most out of the times when it is, and not lose too much when it isn’t.