Losing trades are inevitable to any trading plan and it’s the ability to manage these losing periods and the your primary role of preserving capital that will enable long-term survival and capital appreciation.
You must anticipate losses, expect them, plan for them, embrace them, grab them. Your first loss is your least loss. Most importantly do not take losses personally. They are an integral part of successful trading.
Sound money management philosophy and skills are absolutely fundamental to success to keep losses small. Successful futures traders work according to probabilities, aiming to win on average more than they lose. Whatever the approach, money management reduces the need to find the perfect system.
Large loss of capital
If your account equity declines by 50% at any stage, trading should be halted immediately and indefinitely until you reassess your trading goals. Is Futures trading for you? It is imperative to keep your individual losses small. The table below shows you the returns you will need to generate based on the loss of your original capital. If you lose 50% you need to make 100% return just to break even.
Smart...
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