HOW-TO: Losses can and will always unfold in Trading

14 set 2021

In this help Tutorial, I would like to take a look at losing trades, as show you that losses can and will unfold, no matter what Trading approach you take.

In the video we take a look at a losing trade on the 3min NQ. I know that 3min is shorter time frame than we usually look at in TradingView, but it illustrates the example well. As you will see, losses will always unfold when Trading that is why it is important to keep them small. One technique to achieve this is the use of Position Sizing. This varies the number of Lots / Contracts / Shares you take to keep your initial risk small and (more importantly), constant across all your setups. For Futures we suggest a maximum of 2% of your Trading Account size.

Over time, your aim should be then to have Profits that are much larger than your losses. That is why we always look at Risk (or R) units for loses and Profits. In this way your Profits can be large in relation to your losses.

It is so important to understand, and accept, that no matter what trading approach you take in your own trading, that losses can and will occur. That is why it is vital to keep those inevitable losses small, and Position Sizing is one method to achieve that.