Conclusion

There are no guarantees of success in investing. In fact, the only thing that's guaranteed in investing and trading is that you'll fail many times. But you must prepare emotionally for such inevitable failures. And no matter how much preparation takes place, dealing with actual failure will be harder than getting ready for it.

Indeed, you have to prepare yourself for the possibility of multiple, consecutive failures - and structure your positions such that you can absorb a large number of consecutive failures.

It's also important to keep in mind that there's no such thing as a trade or investment that you're going to get into and be up on as soon as you establish the position. In fact, if you use limit orders, as I almost always do, it's of statistical necessity that you'll almost always be down immediately after establishing the position.

No matter how much you perfect your knowledge and skills, you'll experience failure in trading and investing. Constructively accepting -- and appropriately dealing with -- failure is at the core of successful trading and investing.

It's been said many times, and it's true: In order to become a good trader and investor, you must learn how to lose money.

However, even more important is knowing what to do after losing money. Lessons must be learned and remembered. However, they must be the right lessons.

One must vanquish from one’s mind, heart, spirit and soul all of the destructive emotions that are associated with a failed trade or investment. These associations are “false lessons.” Failure to vanquish emotions associated with past failures can emotionally predispose one to behave in such a way that is suboptimal in the future when circumstances are similar, but different.

For example, if I were to carry over emotions associated with this failure, I might be inclined in the future to stay in a rally to long for fear of “getting out too early.” I might associate future experiences with this recent one when in fact, the two situations may be significantly different.

Remember: Investing is more an emotional than an intellectual discipline.

Become self-aware. And become the master of your thoughts and emotions in relation to the flow of events. In investing, you can rarely change the relevant economic and financial events; you can only master the way you think about and emotionally relate to these events.