What is Short Selling?

Short selling is selling stocks without have the stocks in demat account. Short selling equities must be closed the same day (intraday) or market makers will close the stock in auction and you will have to accept whatever price market makers get in auction. Usually this results in losses. Therefore short selling should be done intraday only and must traded under (MIS) Margin Intraday Square-off.

Short selling can be done in derivatives (options and futures) if the trader wants to hold the position overnight. But overnight gap up and down comes with huge risk. Overnight losses can exceed 10,000.

Does it mean over night short selling using derivatives is very risky?

Yes it is. Most short sellers lose their short when the stock gaps up the next day. Sometimes the risk management team square the position themselves to manege risk. They are under no obligation to inform the client of an automated close-off if the risk goes beyond a limit.

Does it happens every-time when the position goes in risk?

When shorting a stock in derivative segment, the broker blocks minimum 60k depending on the stock volatility and lot size. What needs to be blocked is decided by a software for each stock. Most brokers block slightly above NSE stipulated rules for derivative trading to remain risk free.

So when the position loses 80% of its value the risk management team calls the client to explain them the situation and warn them that if they lose 10% more they will have no other option but to close the position.

But in some cases the loss is more than 90% of the margin blocked when the stock gaps up the next day, in such cases the broker is in huge risk and has no time to call the client. In such a case the broker or the system closes the position without informing the client.

Do brokers have the right to close the potion without informing the client?

These situations comes rarely when stocks gaps up more than 10%. But yes they have the right as brokers are taking risk on your behalf when you short sell a stock. They are liable to pay the loses to the exchange therefore money is blocked in your account. Its not the brokers who keep the money – when a loss happens the broker will have to settle the amount (MTM) everyday to the exchange on futures trading. Losses/Profits from all their clients account is calculated and settled to keep the accounts up and running.

If one broker defaults then the whole system will collapse. So the broker does not want to get into any kind of danger zone. To avoid this situation they cut the losses. You can say stop-loss being taken by the broker on your behalf.

How To Manage Risk Short Selling Stocks?

Short Sell Stocks With Less Than Expected Earnings

You can read in various websites the market expectation of a company during the result season. You can short sell stocks that declared profits less than market expectation. Chances of winning percentage will be high.

Risk Manage The Leverage When Shorting

Leverage if managed well is not bad, but some people over short sell. This is not good. You cannot get stubborn when short selling. Nothing is guaranteed – just because you think the stock may fall it may not fall. So go as per the expectation. Even if you have the money to leverage more – do not trade more lots than you cannot handle.

If the stock gaps up there is lot to lose, so trade with the lowest amount of leverage or lots.

Keep A Stop Loss When Shorting

This is very important when shorting a stock. You must know how much you are willing to risk. Do not take more risk than what you have decided. Once that limit is reached take a stop loss.

Small losses are ok, but big losses are not. Small loss can allow you to live to fight another day and potentially make a big trade.

Do Not Short Sell A Stock If It is Gapping Down and Hitting The Circuit

Some people short sell stocks that are hitting the lower circuit whenever the trade opens. This can be dangerous. Eager buyers are waiting for trading to resume in such stocks so that they can buy.

Once such a stock bounces back – it keeps hitting the upper circuit. You will not be able to get out of the situation even if you want to. There is a chance that you will lose entire margin blocked for this trade.

Trend of Overall Market is Important

In a bullish market its better not to short sell. The stock may reverse as soon as you sell it. Short sell when the markets are in a down trend.

Hedging Short Sell is Important

Overnight gap up can be dangerous as trader cannot take a stop loss overnight. The only way left is to take a stop loss. But if you hedge your trades losses will be minimized whatever happens and profits will soar.

Hedging is a great way to trade peacefully as hedging ensures that losses are restricted while the profits soar.

You can Learn Hedging and Monthly Income Generating Option and Future Strategies in my course. Fees can be paid here. It is a must do course if you are future and option trader or aspire to be one.

There are two major problems with new traders. These two problems are main reasons why new traders lose money.

See this whatsapp message I got from a new trader:

Reason for new traders losing money

Here is the text:

Hi it’s Abbas . I read your blogs and 5 days email.

I will share my experience. I started share trading in [broker’s name hidden] and lost almost 25k in first 15 days, in Feb 2018.

Then again I lost 15k in this April month in equity in intraday trading in stocks. I have less knowledge of options and futures. But after reading your website blog and option basic knowledge attachments. I have some now.

Even before your email on 23 April I lost 12k to tip advisor. I don’t how they get our numbers and keep calling.

I need your advice and help. I will subscribe to your course after some time as I need a break. And I am learning and practicing trading.

Lets look at the problems of new traders:

Problem no 1: Less Knowledge

Do you think with less knowledge you can excel in any field? Especially in stock markets where your hard earned money is involved it is very risky to enter with less knowledge. Your competitors are HNIs and DIIs. Do you think with less knowledge you will be able to beat them over the long period of time?

Think about it.

Luckily this person has lost only 30k till now. Look at this loss of 40 lakhs, loss of 2 crore and biggest of all 3 crore loss. 🙁 🙁

How can someone go on to lose this much money in greed for making more. I fail to understand this.

Is your story the same as any of the above? With less knowledge there is less than 0.1% chance that you will succeed.

Problem no 2: Tip Advisory Services

Once a new trader is unable to succeed on his own he turns to tip advisors. This is the next blunder. Name one person who became rich trading the stock markets by taking tips. I have written an post on why tips cannot make you rich.

Look at their promises – SMS or calls like we will make you 1 lac daily and the poor retail trader gets trapped. Forget about 1 lac daily. Average retail trader loss due to tip providers exceed 1 lakh. Loss on paying a monthly service to get tips and loss on trading the tips. Do not believe in guaranteed profit promises from the tip providers.

If you try to call them after losses there is no one to pick the phone.

They give 5-6 calls daily. They know very well that non of the service takers will be able to trade all of them. So if someone calls them they can easily say you did not trade all calls, so we are not to blame.

Then you leave their services, someone else joins. 🙁

Its sad but the problem lies with the trader too.

And the problem is this:

NEW AND EXPERIENCED STOCK TRADERS BOTH WANT TO GET RICH VERY FAST WITH EITHER SPECULATION TRADING OR TAKING TIPS.

Let me tell you clearly and honestly that making money in any business takes time. Stock trading is also a business not a magical source of income. And expecting 10% a month from stock markets is also a blunder.

Look at this ROI (Return of Investment) Yearly graph of Berkshire Hathaway:

Berkshire Hathaway Performance

And a note on their Compound Annual Growth Rate (CAGR):

However you analyze it, Berkshire’s long-term performance has been awesome. Using market value, he says, its shares gained 21.6 percent annually compared with 19.4 percent for book value and 9.9 percent for the Standard & Poor’s 500-stock index, with dividends. Using market returns, the shares gained a cumulative 1,826,163 percent since he took control.

Source:
https://www.nytimes.com/2015/03/08/your-money/warren-buffetts-awesome-feat-at-berkshire-hathaway-revisited.html

Read that again just a gain of 21.6 percent annually yet Warren Buffett goes on to become worlds riches man.

Yes its true that he compounded millions of dollars to make billions. But ultimately it was compounding that did its job.

History has it that even 21.6 percent annual gain is great return on investment. But yes this has to be consistent.

What you can do?

Stop speculating and stop taking tips. You can download this PDF file which well explains the basics of options and then you can do my option course to generate wealth over the long period of time trading options very conservatively with proper hedge to restrict your losses.

There are many Psychological Obstacles For Traders. No greed control, no emotions control – trade whenever you feel like trading, itching to trade just to trade and have fun, etc.

All of these are dangerous to your trading account.

You should trade only when an opportunity comes not wherever you feel like or you think so.

A few days back one person called me and said he is losing 94k on a put option. Invested 1 lakh and current value 6k 🙁

When I asked him did you hedge? He said what is hedge?

This is where the problem is – one you trade naked (naked trading is when you trade without hedge), second you trade because you think so a put or a call will increase in value, third there is no risk-management.

For how long will this go? Then why blame the stock markets when you yourself are destroying your wealth through speculative trading?

Trying to make too much money in a small time will NEVER WORK.

But you can make small profits consistently. Its better to make small profits more often than making huge and then losing it all.

If you are one of them who is losing consistently trading options you can do my conservative option course where you will learn how to make small profits consistently every month. Your job is making more money – give your time to your job – and give only 20 minutes a day to stock markets yet create wealth from stock markets.

Here are some Psychological Obstacles which a trader must overcome

Psychological Obstacle 1: Unrealistic Expectations From Stock Markets

New traders and even experienced traders believe that there is some magic pill which if they can crack they can become extremely rich trading derivatives in matter of months. This is simply not true. Yes if done well your CAGR (Compounded Annual Growth Rate) on trading money will be good like 20-30% per year, but it can never get near 100% which most traders especially new traders think.

A lot of people do not do my course for this reason alone – they keep the phone down as soon as I say you can make approx 2-3% a month. This is too less they say and keep the phone.

They keep trying to achieve that 10% per month – some per trade, and lose it all. Then realizing that even 1% a month is a good return. Then they call me back after realizing the facts.

No doubt why 99% of traders lose money and 80% of investors lose money. But those 1% traders make more than those 20% of investors.

It needs real patience and practice to reach that 1% mark of traders who make money, but if done well its possible. For that you have to know your obstacles – come over them, do some research and get some knowledge.

Psychological Obstacle 2: Need For Instant Profits

As soon as a trader gets into a trade the first thing they look is for instant profit. This is not fixed deposit. Hey even fixed deposit has a time limit. If you take your money out before the fixed time you will not be paid the promised percentage.
Then how come you think that as soon as you get into a trade you will profit?

After this two things may happen. Either a small profit or a small loss. When the trader sees a profit he/she immediately books it. But when they see a loss, they sit tight in the hope that the stock will reverse and bless them with money. Stock does not reverse and losses exceeds. When it goes beyond imagination the trader takes a atop loss only to see the stock reversing as soon as they took a stop loss.

INTRADAY DAY TRADING IS ALSO A PERFECT EXAMPLE OF INSTANT GRATIFICATION.

No doubt why intraday trading is very popular. There is nothing wrong in Intraday trading if you are making profit in 8 out of 10 trades. But how many make profits in intraday trading?

Psychological Obstacle 3: No Place For Patience

When it comes to buying a piece of cloth we have a lot of patience. We jump from one mall to another, one shop to another to buy a Rs.500/- shirt/saree, but when it comes to bet Rs.50,000 in trading we do not think twice – it just takes a second to invest.

For some strange reason, other than trading, we show a lot of patience in everything else. 🙁

Patience is the main difference between winning and losing traders.

Jesse Lauriston Livermore said it perfectly: “Money in the stock market is made by sitting (waiting for the profits to come), not trading (every second)”.

Psychological Obstacle 4: Full Of Ego

When we lose money we go for revenge trading. Stock markets has no friends or enemies, it does not know you. So why to show ego to stock markets? When you took a wrong trade it is you who should take the blame, not the stock markets.

Try to master your ego and study your wrong trades – do not show ego/anger to stock markets and increase the lot size by 10 times. You are likely to lose more.

No strategy has a 100% win rate. So when you are wrong take it humbly. But you must make sure to hedge your position so that when wrong the loss should not pinch you. If you have not hedged your position overnight, one loss can wipe out weeks and even months of gains. Hedging positional traders is very important.

If you cannot keep your losses small, I can tell you with guarantee that you will never be able to become a good trader. You will lose all money in your account.

If you have a lot of ego, it is advisable to either hedge your trades or keep a stop loss in the system not in your mind.

Psychological Obstacle 5: Focusing On The Trade Every Second

New traders have a habit of looking at the Mark to market (MTM), and the trade every second. If you have taken a positional trade then there is no need to keep looking at the trade every second. Fluctuation is part of stock markets. If you have set your target and stop loss – come into action only when they get triggered.

Psychological Obstacle 6: Focusing On Every Trade

One good trade and the trader pats himself at the back thinking that he/she is a good trader. Exactly opposite if they see a red day. One or two trades do not define you as a trader. You monthly performance defines it and your yearly ledger confirms it.

Psychological Obstacle 7: Relating One Trade To Another

This is a big Psychological Obstacle. If you just got a profit you will jump into conclusion and take another trade based on the previous trade. Similarly if you had a bad trade you will never copy it.

A new trade is a new trade. All trades are completely independent of each other. Do not try to base one trade to another trade. Your findings and research are more important than the trade itself. If you have done lots of paper trading and seen success then just because the first real trade failed does not makes your research trash.

Psychological Obstacle 8: Fear Based Trading

If you are trading in fear you will never make money. If you are trading in fear it means you are gambling not trading.

Hedging your trades will take the fear out because you will know beforehand that it will restrict losses, and you will be able to trade successfully.

Fear will cause you to take profits too early, but sit back on losses. Hedge will ensure you neither take out profits early nor see huge losses ever.

FOMO (fear of missing out) is also a big Psychological Obstacle. If a trader decided to buy a future of a stock but out of fear did not buy and later sees that the stock actually jumped 10-20%, he/she will surly take the next trade because of FOMO (fear of missing out) – but this time they see a loss.

To take fear out learn to hedge, respect your stop loss and do not take huge risk initially until you start seeing profits.

Do Not Trade Without Hedge

If you are a future and option trader you must learn hedging to restrict huge losses overnight. You can do my conservative option course and learn properly hedged strategies to make consistent monthly income. These strategies can be traded in Nifty, Bank Nifty or Stocks. You can see testimonials here and enroll for the course here.

Look at this SMS I received today:

Do Not Believe In Guaranteed Profit SMS

Look at the hidden language – lets disseminate it:

1. Earn up to 3 Lakhs Weekly
2. Free Software
3. 100% Confirmed Calls

Which one do you believe is true?

NOTHING.

Lets get deeper. Whose fault is it? No its not entirely his fault. More than 90% of traders still believe that there are some software that can generate calls or signals to buy and sell options/futures/equities.

But where is that software? Who made it? What’s his name?

You will not find it as there is none.

How can a software give signals when it does not have a brain?

Yes there are many trading software – but they only show what is happening in the trading world – they just show you some data based on which you can take trading decision.

Like some software can create candle sticks charts, some the closing bars, some can make a line over Moving Averages, etc. But this is just the data, not what to trade.

If a stock is trading over its 50 days moving average and if the software maker has fed it to generate a BUY signal when a stock moves over 50 days moving average then it will give a BUY signal – that DOES NOT in any way mean that the software knows that the stock will now move up.

As a trader even if a BUY signal is generated by a trading software then it is you who has to decide whether to follow the signal of the software or not?

But believing that a software giving a buy or sell signal is 100% confirmed or guaranteed call is a myth.

Do not believe that there is any software that can generate signals and give calls. If that was true everyone would have bought that software and become rich. No engineers, no doctors, no businessmen – there will be a world with only traders patiently waiting for signal every day, with a computer and a signal generating trading software. At 3.30 pm everyone is richer than the previous day. But hey then who loses? Some has to lose money for someone to make, right? If everyone will use software then there is no one to lose.

In that case the stock market will collapse. Because there will not be any traders on the other side. Means everyone gets a BUY signal but then if there are no sellers – a trade cannot take place.

If you are reading this I hope it’s clear that there is nothing as 100% confirmed signal generating trading software.

A software will generate a signal depending on how it was made. Its ultimately the person behind the software who is working – because he programmed the software. Whatever he/she has programmed the software will say exactly that.

So if the person who made the software can give guaranteed trading calls then the software is worth buying – but if that person cannot give guaranteed calls then the software is just another trash.

Next time such a SMS arrives in your mobile phone, just delete it.

Today 18-Apr-2018 was a non-trending day for stock markets. See this pic:

Nifty on 18-Apr-2018

See the pic clearly. Till 1.45 pm all intraday traders must be long trying to make quick bucks. But then what happened?

STOP LOSS

I can bet ALL TECHNICAL INDICATORS – those 5 min charts, 15 min charts, 1 hours charts, candle sticks, bollinger bands, Moving average convergence divergence (MACD), and any other indicator that I am missing must be giving only one signal

GO LONG

And then when the trader goes long thanking the technical indicators, the software that they bought for a few lakhs or paying a monthly fees goes bust (fails) all of a sudden.

Can you kick your software? Are they to be blamed? NO. Then whom to blame? Yourself.

What makes you believe that the 5 min charts that only gives signals based on last 5 minutes will be correct for the next 5 minutes? Or one hour chart giving signals based on last 1 hour will be correct for the next 1 hour.

What about a stock giving great return for the last 1 year? Is there a gurantee that it will give the same return in next 1 year? NO.

Technical Indicators just give signals based on whats happening NOT what will happen.

Stop spending money on software producing beautiful charts. If you still do not believe me and want to stick to charts moneycontrol makes free charts.

Here is ITC Technical Chart:

ITC Stock Chart

Source:
http://www.moneycontrol.com/india/stockpricequote/cigarettes/itc/charts/technical-chart-analysis/ITC

In this post I will discuss some points on how to avoid huge trading losses that most traders suffer almost everyday.

Forcing Yourself To Trade:

This is a BIG Mistake. How many times you have forced yourself into a trade and lost huge money? I am sure many times. And why you do that? To make money or to lose money? If you are losing money then why you force yourself to trade?

Stop Forcing Yourself To Trade

You are in control of trading – neither brokers nor tip providers (if you are taking tips and wasting your money) are forcing you to trade then why you do that on the first place?

The market will do what most people will do. I mean if on a certain time there are more buyers than sellers then markets will go up, but if there are more sellers than buyers, then markets will go down. That’s the reason you see ups and down in Nifty in a single trading day.

You do not have control over the stock markets but you have control over your finances. So focus on your trades and control it. Taking a trading decision itself is as important as doing the trade. If your research is not complete do not trade.
Try to keep your stop losses to half or less of your profits. Read this article to know more.

Do Not Show Ego To Stock Markets

When we do something wrong as humans we are not willing to admit. We try to prove ourselves right next time and increase our trading capacity thereby increasing our risk. By increasing the risk we forget that losses can also increase. But we only think about the profits not losses. The result is obvious. More loss.

Our ego is a huge barrier to success in trading.

So how do you not show ego to stock markets? Do not increase your risk capacity to do revenge trading. You mat end up losing more money.

Do Not Trade With Money You Cannot Afford To Lose

You must trade with money that you do not need for at least next 6 months else you will be forced to make money and you will trade in panic.

Trading in Fear Results In Losses

Imagine your fingers tumbling while putting a trade. Do you think you will ever make a profit?

When you trade with money you cannot afford to lose you will stop out as soon as you see a loss. MTM (Mark to Margin) is almost guaranteed in every trade. In fear when you see MTM you will take a stop loss. Now combine 10-20 small stop loss + brokerages. This is a huge loss.

Trading losses SHOULD NOT Effect Your Net Worth

Do Not Add Money To A Losing Position

This is a very common practice among traders. In hope of a recovery they add trades to a losing position to average out and come out as a winner.

This is a Trading Blunder

The longer you are in a losing a trade, the bigger will be your losses. Therefore instead of averaging out and increasing the risk you must stop out of the trade. If you average out you will end up taking an even bigger loss.

It should be the other way round – you should be adding positions when a trade is going in your favor.

Plan Your Trades Well – Stop Loss and Profit Target Must Be Known Before Taking The Trade

I think the sub-heading is self sufficient. Most traders decide stop loss and profit booking but when they see a trade not going in their favor or even going in their favor they change their plan. This results in huge losses and small profits. This is very common among traders all around the world.

I hope the above post will help you reduce your trading losses.

Conservative Nifty Option Course

You can do my Conservative Nifty Option Course and learn strategies which will help you generate a monthly income without ever taking a huge loss. The losses are well protected by hedging. Whether you are an option trader or a future trader you will learn how to protect your losses and keep making profits most of the times. You can read about the course here. Fees is here. If you want to know anything about the course you can contact me.

This is one of the most common question I am asked by most traders since I started this website in 2015. Is It Possible To Become A Full Time Stock Market Trader?

Read this article to know if it’s possible to become a full time stock market trader. Basically if you are a good trader and making consistent profits then yes its possible. By consistent I mean in 6 months of trading you must be in profit of at least 10%. Which means if you can make over 20% a year you can become a full time trader, else its better to continue your job and trade.

What You Need To Become A Full Time Trader?

1. Read above I have already said that you should be able to make at least 20% per year from stock trading alone. If you pass this criteria then you can think of being a full time trader.

2. You must have a work ethic. You must be thinking yes you have. Work ethic is setting a proper time for different jobs related to trading like research, plan, risk management etc. There are lots of traders who trade Intraday trading without any plan and think they have a great work ethic. But its not. How many times you trade in a month is not important. What you are trading, how you are trading, your trade plan is important.

3. Trading needs a right mindset. Lots of people trade on hope that one day will come when they become successful trader. They keep losing money trading on hope. This is not a right mindset. Right mindset is knowing very well that trading on hope never makes money.

4. Patience is required. Not every trade will make money – this the trader should know and not panic unnecessary when loss is struck and not do revenge trading. Some traders give up after losing money. But those with patience keep trading but you should know that your success rate is good over time.

5. Finance is required: With 10000 to trade you can not become a full time trader. I do get questions from trader who have only 10k or 25k to trade but want to become full time traders. Once a person called me and said one of his friends is making 25000 from 10000 since last 2 years. I asked him then why he is still trading with 10k only, why he is not increasing the amount? He could not answer my question. Either he or his friend was lying. This is a myth that 10% or more per month is possible from trading.

Since 2-3% per month is possible, you must have the capital to trade so that you can take out money from the trading account every month to run your house.

If you have done my course and making 2-3% a month, increase your capital to trade to make a full time income.

6. Leave some money to take the compounding effect: You should take some money out if you have become a full time trader to run your family and leave some to get the compounding effect to make more in time to come else you will have a constant income. Just like your salary the monthly income from trading should also increase.

Conclusion:

Becoming a full time trader is not difficult if you can make at least 20% CAGR (Compound Annual Growth Rate) on your trading account and keep increasing the trading size by investing more or compounding. Once you are comfortable with your monthly profits you can become a full time trader. If you do my course you will learn strategies to make more than 20% CAGR (Compound Annual Growth Rate) trading options.

Bad news of PNB, SBI and Union Bank of India, the war between world’s top two largest countries US and China over trade tariff leading to Japan’s Nikkei, Dow Jones and S&P 500 plunging 5-6 percent each will certainly have an effect on our stock markets as well.

Now based on this opportunity market pundits will start telling different stories in business channels and news portals online. Some will say go short Nifty might see 9600 in days to come, some will say go long Nifty will bounce back soon. Whom to listen?

Can any of these so called experts pin-point the immediate bottom? No. Why? Why these things happen? Because they see different technical indicators. Problem with too many technical indicators is that they give different signals.

Every technical indicator will tell a different story. Moving Averages will show something, Pivot Points will say something else, and all these indicators will say a total different story:

RSI, STOCH, STOCHRSI, MACD, ADX, Williams %R, CCI, ATR, Ultimate Oscillator, ROC, Bull/Bear Power, etc.

Why these technical analysis tell a different story? Because they all look at different things so obviously all will draw a different picture.

Read this – Technical Analysis Does It Make Money.

This is the reason traders lose money – either speculations, or tips, or I think so but it did not happen 🙁, or some technical indicator or some trading software, algo trading – the list is endless.

So who makes money? A person who keeps things simple – does not goes for these fast indicators and speculations. Keeping things simple always makes money in stock markets. And this is what you will learn in my course. And if anything goes wrong then hedging takes care that losses are arrested.

You can enroll for my course here and invest in leaning. Remember education will help you for life.

All traders see losing days. I do not think there is a single trader who has never lost while trading options/futures or equities. If you take too much stress then trading is not for you. These days will come for sure, you cannot avoid them. If you get frustrated due to losses you will start doing revenge trading – revenge trading is a sure shot way to lose more in the stock markets. Even if you succeed one one revenge trading it will not bring back all the money lost. This can bring in mental issues. This is the reason I emphasis on hedging all your trades so that even if you lose money it will be small amount that will not bother you much. You can do my course and learn hedging in a proper way plus you will learn strategies to make a monthly income.

So How To Bounce Back From Bad Trading Days?

Do Not Focus On Intraday Results – Your Monthly/Quarterly & Yearly Results Matter

Traders keep a constant watch on their trades. This is a BIG mistake. Constant watching is actually dangerous for trading. When you watch constantly you are most likely to take bad trading decisions when the trade goes against you. What occurs in one second or one trade is not a final result and dopes not make you a good or bad trader. It takes weeks or moths to know how you are as a trader. If after three trading months you are in losses, then you need improvement. If you are in the green after three trading days, you are a good trader – but your profits should far exceed current inflation of your country. In India current inflation in Feb 2018 is approx 5%, so your profits in a year of trading should exceed three times inflation which is more then 15%. If you are not making more than 15% a year then you still need improvements. Ideally a good trader is someone who can make at least 25% a year.

If you have a back up data of your trades then check your bad trades and see of they all have something in common. If yes you need to work on that weakness. In fact you should check the good trades as well and if you see that they have something in common then you must try to repeat those trades or trade them more often.

Do Not Keep A Week Mind & Body

A trader needs to be healthy. Any botheration about your heath will show on your trades. If you are having a severe headache do not trade or if you are not feeling well do not trade. For that you need to eat healthy food and exercise for half an hour everyday.

Physical exercise like running about a kilometer is one of the best ways to relieve stress after a losing day. As a trader we need to sit in front of our laptops from 9 am to 3.30 pm (life it tougher for Commodity & Forex traders). This is bad for both your physical and mental health. Note: The strategies in my course are such that when you trade, you need not monitor them continuously every second. You can set them and forget them till the next day. Monitoring twice a day is more than enough.

For traders who constantly keep a watch on their trades – trading is time-consuming, mentally and physically exhausting. If they exercise it will keep them healthy. A traders needs to follow a discipline in their trading as well as health.

Do Not Keep A Constant Watch On Your Trades You Will Most Likely Take A Bad Decision

Need I say anything more on that? How many times you have taken a stop loss against your plan just because you were watching your trade going negative. We are humans and its obvious that if you see making a loss you will sure come out of it only to see that the trade went in your favor just after you took a stop loss. There is no point in repenting later. Mistake was done because you were constantly watching your trade.

Its better to stay away from you trades for some time. Let the markets decide the result of your trade – you have no control over it so why watch continuously? You may over trade and destroy your wealth.

End Of Day Study Your Trades

If you made a loss you need to study why you made a loss. Write it down on a peace of paper. Never repeat that mistake. Please keep in mind that not all losses are because of bad trading decisions. Some can be good trade but bad luck. You need to figure out mistakes from bad trade even if it made a profit.

Study Your Past Win Trades

Studying the winning trades are also important just like studying the losing ones. They will help you know exactly what you need to do in order to replicate that success.

What You Can Do If You Are Losing Money Trading Options

If you are losing money trading options and on a revenge trading path then you are on a path of financial suicide. Do not get on this path of financial destruction. Learn conservative trading. Learn to make small profits first like 2-3% a month then try to make 5-7% a month. Both of which can be learned in my options course. Hedging will ensure that your losses are capped but profits soar.