Making Back The Loss

Modern Rock's most powerful advice : when you have loss, first you need to MAKE UP that loss, then look to make positive gains. 

Easier said then done right? Why ? Because in  trading, emotions are almost unavoidable.
It is totally in human nature to FEEL A NEED to make up the loss by hitting harder on the very next trade, and AS SOON AS POSSIBLE. I've blown many accounts because of it. Just to see few hours or a day later a great set ups that I should have waited for. They always come. That's guaranteed.  Those who can avoid this really bad habit are 5% of all traders. Those are the ones who make it  in this business. However it is temptation even for the best ones to go in harder and  bigger  and ASAP in the very next trade , mostly a trade that has a mirage set up.. It is the urge to make that loss up,  ASAP, and here is the guy who admits it :

How you can really stay calm and focus on making up the loss?
 How can you really execute a such simple task? 

To elaborate,  will do the following example:
If you have been having more losers then winners , then first thing you may wanna do is: 

1) Reduce your size 
2) Focus on making back just your LAST LOSS
3) You do not have to make it up on one trade. That will be hard anyway,  since you will have to reduce the size. 
4)  Make it back in few trades.

5) If you succeeded making back the last loss, then you are on a good track , you are doing something that works. Take notes.
If you still cant make back up the last loss, even after few smaller size trades then you must re-evaluate your strategy . Be thankful that you traded smaller size , or your loses were gonna be even much bigger.  
 The PROS of this approach:

• If you made the loss by trading smaller size, you re-enforced your confidence that you are doing something right. 
• If you didn't make it in few smaller size  trades, then you lived to trade another day , another morning when the opportunities are the best.

The CONS :

• It is time consuming. It takes patience.Next good set upi will come but may take some time. Maybe better to wait till next day. But till you are successful making up for  your losses , do not look to make any gains. One bite at a time. Chew it good, slowly,  so you wont choke.

Wait for the best set up so you will have less work to do on making up for the unnecessary losses. So the thinking process should be like this:

1) Should I take this trade?

2) If I lose,   am I willing to take smaller size in few more trades to make up what I may lose?

3) Is it worth doing the extra work to make this possible loss back?

Wearing an electric collar around the neck that shocks you with painful voltage when you click the buy/sell button to initiate the trade,  may be of even greater instant benefit since you feel direct physical pain of your own decision that might be just  impulsive in need to make up the loss ASAP. The shock may also be adjusted by the size of your position.

The key word in this post is "ASAP". Think about it when you have the next losing trade.

Thanx MR for all his twits so we can all reflect in our actions.

Salud