Losing Money Trading for The First Time - How to Overcome The Shock?

You will see a major loss (or many) in your trade, either due to technological failure, a break in discipline, or just having a huge amount of money flow out of your portfolio. Bouncing back after a large loss is not difficult; it can be accomplished by doing a few easy things. When it comes to mending the emotional harm done, particularly trauma to confidence, what's tough is the hard part.

Overconfidence is an issue for most traders, but effective traders don't let fear dictate their trading decisions, since fear does the same thing. Unless a losing streak occurs, you may lose faith in the market.

Individuals may question themself after a winless streak or big loss, which results in all the usual new trader issues, like selling trades prematurely, clutching on to them too long, refusing to trade unless you have a guaranteed win, or engaging in more dealings than you should just to have a few profitable trades. 

In the event that you're encountering these problems or you've experienced a large loss of money, there are some methods that can help you get your bearings.

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The Day of your Loss

Even professional traders have terrible days. Often, the worst day of your life will only cost you slightly more than your average successful day. Avoid squandering too much on a poor day if you've averaged about $700 on your successful days. Keep the negative under control.

A significant loss may prompt feelings of vengeance, frustration, dread, wrath, and self-loathing. You can't have a clear mind in the wake of a huge defeat. Over the course of a year, there remain more than 250 trading days, so there is no need to hurry to get back in the market today.

Accept Responsibility

It might have been a combination of things: maybe it was simply a few of terrible days, perhaps it was your greatest single loss ever, or it could even be a change in your life. In the latter scenario, if you find yourself bankrupt, there is not much you can do. 

Before you engage in trade negotiations, be sure the problem has been addressed. Once you've completed the process, you may go to the next stage, but you must first finish the process. If you have a huge debt hanging over your head, it will only be worse if you intend to use the debt to eliminate it.

That is because if you have emptied your account, you've had a losing run, or you've had a rapid loss, these conditions are different. Though you've sustained some minor injuries, you're already in the game. Once a trader has a comeback storey (or several). 

Even if the price broke beyond your stop loss because of an unexpected news release, or a technical breakdown led to a loss of connection and the marketplace reacted against you, it doesn't matter.

You can always find a reason why you lost a deal. It's true that some of these reasons are well-justified, but as traders, we must embrace all the associated risks. 

As long as we continue to refuse to face the fact that we have responsibility for everything that occurs with our commands, history will repeat itself, and we will go through it all again.

Take accountability and learn from your mistakes and p reventing it from happening again will be aided by this. In addition, those who bottle up their feelings of anger and frustration and then blame others for their misfortune are actually more prone to illness.

Instead of saying someone else is to blame, we believe that if someone does not have the power to manage their own trade, they should not be trading. If you are in charge of your trading, you can solve the problem; if others are in control of your trade, nothing can be done.

A problem can always be resolved. Any of these may be required to achieve your financial goals: shifting the market, having an alternative data connection, making stop-losses and objectives routinely sent out when a trade is placed, or if your system becomes stuck you may just want to get rid of your positions. 

The answer is there in front of you; all you have to do is look for it. In order to find it, you must acknowledge that the loss was due to a poor management of a situation, and then take action to remedy the situation.

The first step is to identify and fix the problem that caused the downfall. However, it's still a problem of self-confidence. Even after you've corrected the problem, your belief may be shaken because of a recent disappointment.

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Realign Your Focus

When you first began, you were certainly overconfident, however when the market corrected your assumption, you experienced humility. You built your trading strategy, tested it, and eventually used it to earn profits in real-money trading. 

Self-confidence is achieved through doing tough challenges and becoming good at those challenges, as well as trading. As good outcomes begin to flow from that trading strategy, our confidence increases.

After a major setback, return to the fundamentals. Look at your trading strategy and any changes you've made to it. Trading is what got you into the game, therefore it is time to return to your primary motivation. 

Trading is what got you into the game, therefore it is time to return to your primary motivation.  It is difficult to trade, so go and enjoy the challenge instead. 

Laid-back times may lull us into complacency, and when things go apart, that is when we need to get up and try again. Our being off track is indicated by the market.

Practice and Rebuild Confidence

Following a large defeat, a sense of self-worth may be diminished. As a result, trading may not be appropriate for those with psychological issues. Failing to have a clear head can make you disregard profitable deals, lead you to panic in the middle of trades, or behave greedily in an effort to rapidly return to previous winning methods. Not one of them is acceptable. 

Trades in a demo trading for a few days, then take a pause. There's a good chance you'll save money if you've been loosing. Since demo accounts don't hold real money, there is less pressure, and it is simpler to concentrate on trading rather than being distracted by money matters.

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Start Small

Increasing your trust in the market by excelling in the demo mode will put you in a better position to make trades with real money. Instead of returning to the same amount you were trading before to a losing run, begin with a smaller position. 

Reinstate a modest position size on the first day returning. To raise your position size the following day, you must have a winning day with a modest position size. Dropping on tiny position sizes is simpler to deal with if you've had a losing day; having a bigger losing day on larger position sizes is more difficult to deal with.

The best way to go involved into live trading is to start slowly. If you're tired and dispirited, dedicate a couple of days to simulation, and whenever you return to trading in the real world, begin with modest positions and steadily raise the size of your holdings when you have profitable days. 

However many days you win, raise your position size gradually to maintain your entire position size for a week. After a large loss, some traders hurry back into live trading, and they're not prepared. They lost more as a result. A few of traders remain trapped in this cycle and fail to recuperate.

Starting again with a tiny position size is unpleasant, but it's for the purpose after trading larger position sizes. When you lose, remember that going back to the fundamentals and executing a good plan is about earning money, not really winning money. 

In order to earn money, it is important to follow a plan closely. Refocusing on what's essential while using demo trading or trading modest position sizes may help you regain your trust. Certainly, the money will arrive.


If you recently took a huge loss, you should pause for a while. When you return, revisit your trading plan and see if there are any problems in your trading or trading strategies that may be creating the problem. Then, if required, you can make any adjustments to your trading strategy. 

Before investing money, try trading on a demo trading to develop expertise. You should only start trading live after you have several positive days under your belt and feels like your old self again.

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