Absorb: This would be the right time to absorb the lesson that you just learned. They say time heals all wounds; but allowing time to correct personal trading mistakes usually means you're doomed to sustain more losses. The lesson needs to really sink in. If you're up to it, make a written note of how terrible you're feeling in your trading log, and revisit when you hit the wall again.

As Bach said: “That's what learning is, after all; not whether we lose the game, but how we lose and how we've changed because of it, and what we take away from it that we never had before, to apply to other games. Losing, in a curious way, is winning.”

Act: Nothing makes us want to get it all back immediately than a string of losses. Again, some of my most painful losing streaks have occurred while frantically trying to make up for a minor loss. Only when I realized, early on in my trading career, that the market, like life, owes me nothing, did my trading start to show signs of improvement.

You also want to be aware of the "revenge" trade. Your first instinct will be to short the same stock (if a long position lost you money), or to engage in similar destructive tendencies to get your money back immediately. If you don’t harness this emotion, that single loss could cascade into a domino effect.

Now that you have endured losses, leave them behind while evaluating other trades. If it helps, take the stock symbol off your screen. Rebuild your portfolio, and, more importantly, your confidence by trading small and trading conservatively. The only way to ensure that this loss is erased from your memory is to not solidify it by creating even greater losses.

The one great thing about losses is that they teach you what not to do. As I was telling a fellow Minyan at Festivus, if I hadn’t made numerous mistakes and incurred eventual losses, I would have far more than is currently in my trading account - but if were it not for those mistakes and lessons learned, I wouldn’t have any account to trade at all.

So, my friend, focus on the positives in your life, offer gratitude for all you have been blessed with, and start trading again with small positions and good money management discipline.

I'm reminded of Maria Robinson’s words: “Nobody can go back and start a new beginning, but anyone can start today and make a new ending.”

Good luck with your trading - and do let me know how it works out.

Sincerely,
Smita Sadana