Today, I want to talk about something that happens to all of us at some point in our trading journey…
You start taking loss after loss and they start to add up…
So you start trading more setups with large sizes so you can make your money back.
But you just end up with larger losses and now you’re at risk of losing your entire account.
What can you do?
It’s not always smooth sailing in the world of trading, and it’s important to know how to handle these challenging times…
The good news is there are things you can do to turn your trading around and get back on track.
That’s what I’m diving into today …
How to Preserve Capital
When you find yourself in a rough patch, it’s crucial to make wise choices.
However, too many traders find themselves in the scenario I just described…
They think that trading more will help them recover the lost money. But, in reality, it often leads to more losses.
Trust me, I was there myself in the beginning.
That’s how I know going big and trading random setups won’t help you.
Instead, you have to do the opposite of what most traders think…
Trade Small
Trading smaller position sizes can help you minimize your losses.
Yes, it can minimize the returns on winning trades as well, but you’re not trying to make your money back…
You’re trying to string wins together and get your confidence back.
And sizing down lets you take a step back and focus on trading high odds setups using the right entries, risk levels, and goals for your trade.
That can help you get your trading back on the right track.
If you’re still losing too many trades or too much per trade, take an even further step back…
Paper Trade
Paper trading allows you to preserve your capital while you explore different setups, study your data, and gain a deeper understanding of what works for you.
Don’t be afraid to scale back and protect your hard-earned money.
Paper trading keeps you in the game longer so you have a better chance of learning what you’re doing wrong and what you’re doing right.
Once you know that, you can hone on your best strategies and patterns.
You can stack some winning trades together and prove to yourself you have a winning formula.
Add Size Back In
Once you start gaining confidence and seeing positive results with small size or paper trading, you can consider adding size back into your trades.
But add in size gradually and continue to track your results and overall performance…
If things continue to go well, you can gradually scale up further.
If you start to feel nervous and deviate from your trade plan — go back to small size.
This way you can build momentum while maintaining control over your risk and capital.
All of this takes time and patience. So if you’re going through a rough patch, don’t lose hope…
Hitting a losing streak is a natural part of any trader’s journey.
The key to overcoming them is to react wisely and make strategic choices to protect your capital and regain your confidence.
Trading smaller sizes or paper trading can help you preserve your capital while you explore new opportunities.
As you find success with small size or paper trading, gradually add size back into your trades.
This progression ensures that you’re building momentum while managing risk effectively.
Every lesson and challenge leads you to become a stronger and more resilient trader.
If you’re ready to learn a system that can help you focus on stocks with the most potential to explode — and get the trade plans that can help you learn how to trade them — join our FREE live webinar here.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade