Taking a loss: cycle of grief | Psychology and Money Management


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Taking a loss: cycle of grief

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Los Angels
 
Trading Experience: Intermediate
Platform: TradeStation
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Growler View Post
The cycle of grief is a model of how humans experience loss. It is generally considered in context of losing loved ones, but I recently began to apply it to my experiences while holding a losing trade. I found this model allows me to move on from losses much more quickly.

An automated strategy lets me bypass stages 1 (not exiting a looser) and stage 2 (exiting to soon Ė missing profit).
What can be done to mitigate stages 3, 4, and 5?

1. Denial (This trade will turn around. I fail to exit a loosing trade.)
2. Anger (Why am I trading instead of working, Boo Hoo, Iím wonít ever do this again. I exit to soon and miss the profit.)
3. Bargaining (My strategy needs work, If I work on it another 50 hours I wonít loose again. Setting myself up for unmet expectations.)
4. Depression (50 hours later, I just give up as I canít find a strategy improvement)
5. Acceptance (Convince myself, again, that every profitable strategy takes some losses)

In a swing ttrade the grief can go on for days! For me, it starts during the trade and lasts until the next trade. Iím not sure if I can ever remove my emotions from trading.

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