Have You Returned To Investing After Being Burned In The Past?

Discussion in 'General Trading Discussion' started by Buyonthedips, Aug 6, 2019.

  1. Buyonthedips

    Buyonthedips Senior Investor

    Joined:
    Feb 2018
    Posts:
    314
    Likes Received:
    1
    Over the years there have been numerous stock-market crashes which have reduced the wealth of many traders. While human nature means that we will return at some point, who on the board has been burned in the past yet returned to continue investing in the stock market? Have you bounced back….
     
  2. Chartman

    Chartman Senior Investor

    Joined:
    Sep 2017
    Posts:
    550
    Likes Received:
    8
    I use stop loss limits which tends to stop me getting burned. I sell out too soon on some stocks but on the whole I feel comfortable with this strategy.
     
  3. J_C_Anderson

    J_C_Anderson Senior Investor

    Joined:
    Aug 2018
    Posts:
    87
    Likes Received:
    2
    To my mind, it is much more difficult to return to trading after failure than to avoid such failure. When the trader incurs huge loss, that loss impacts trader`s psychology substantial, so depending on his personality he could start to trade aggressively to take the money back (and losing more and more instead), or to avoid trading and to miss great trading opportunities just due to the fear of losing more money. This process requires a lot of time, and sometimes even mentorship or at least the support from trading community.
    Facing huge losses trader should suspend trading at all till he will understand the reasons of such losses. This is the first rule that allows to prevent large drawdowns. It is important to find out whether these losses caused by mistakes in trading strategy itself or i trading process. For this purpose trader could test his strategy using various tools for backtesting, like Forex Tester, for example. Then, depending on the results, he should either to work on the improvement of his strategy or to try to deal with psychological issues that cause underperformance and lead to losses.
    The main idea is that trader returing after huge loss should be confident about both his strategy and his own trading skills otherwise it all could turn into new losses.
     
  4. tradermuslim

    tradermuslim Active Member

    Joined:
    Dec 2018
    Posts:
    26
    Likes Received:
    0
    I have never taken any major risks to get burned that bad. However, if it happens to me, I can return to invest only if I have enough money that is of no consequence when lost. Always invest with what you can afford to lose.
     
Tags:

Share This Page