The Art of Losing

Can you recall the time when you bought a share and it started falling as soon as you bought it you kept holding it in hope that it will rise again but it didn’t and  kept on falling and falling and you keep holding it in hope of it will start rising soon it will rise but the stock kept making lower highs and lower lows it came in strong downtrend and and yet you refused to sell  and then the price reached to such a level that you were not able to sell it even though u wanted to sell it.
  Now u must be thinking how I knew that you have gone through this well the stock king knows all :) and he was you once and he has already gone through all you are going through right now, anyways come back to our point once again  you are in a losing position and you can’t sell it  in that case you must held it for years or months for your price to come back or you may be holding such that masterpiece till date in hope of your price to come back and I know the kind of frustration and feelings you have every time you see such a thing in your demat …… Do you want to avoid such a thing from happening to you in future? Do you want to get above this all? Then here I go to help you get that…………………. the only solution tha anyone can tell you to avoid this from happening in future is to learn an “art the art of losing"  ……….. and thats what the stock king is telling you right now, this a secret art which are known by a very few  amongst the traders and surprising those who knew it are the most successful traders around, the stock king is also one of them J J and you can inherit one of characteristics of stock king right now if you are able to learn this art so keep going…………….. now let me tell you why taking a loss is so important
 It’s a fact that you can’t succeed all the times, your system can’t give you 100% results, many of the best position you will enter may end up into loosing trade and it happens with everyone and it’s a given you are going to make mistakes but what you need to do is to minimize your mistakes or loss arising from losing trades by stop loss and keep riding your gains. That’s killing your losses and maximizing gains……………..  but many of us do the opposite of this we sell a winning or profitable   stock just after 10% rise and we keep holding the looser despite of 30% fall in hopes that it will start rising soon … because we want quick gains and we do not want to lose so we are booking gains and holding our loser so that they can come up and book them in green as well but if we look closely what we are doing here is we are putting  stop gains (yes you are doing it!) exiting stock after a certain amount of gains and riding our losers……… and its already know your losers are more than winners. And what you are doing by this approach is that you are limiting ur few winners to a certain percentage and you are allowing your losers to move freely to any levels …………………. You are actually doing just opposite of what you need to do and you know the results you are getting  with this thing..................  what you should do try the opposite instead, never hold any position without any stop loss exit your looser if it meets your stop loss, you should be clear in your mind before taking any position in a stock your stop loss i.e. the price at which you will book your loses and exit the position if it don’t turn out as expected, ………………… keep in mind not to enter a stock whose stop loss seems to be below 15% of cmp and for the successful ones, keep them riding long enough and shift the stop losses upwards with rise so that you don’t end up giving the gains back to the market in any case and yes don’t overdo it stop loss should be kept checking the chart if you keep the stop loss at 2% below cmp you will get sold out immediately so you must give your stock time and space to move freely and while shifting the stop losses upwards you should keep them at least 15%  below cmp so that you don’t get sold out by temporary fluctuations, in my view you should shift them upwards with every 25% rise……………………… by  using the way I just told your, you will maximize your gains and your losses will be minimized. In other words if you are able to do what I have told you today you will make  a step forward towards becoming a successful trader, because that’s what the successful traders are doing and if you are able to do it, you will also get successful. Many friends don’t use stop loss despite how much I stress on it. stop losses and also I came to now some broker don’t allow stop losses on gtd basis so only option you can try is to replace your broker but no one of us can afford to trade without stop losses, stop losses are a must and one more thing whenever a stop loss get triggered instead of feeling bad you should be happy that we killed a looser and now we have our capital free that can b put to another winner that’s how I think and that’s how the winners think. If you are able to think like them, if you are able to start doing what they are doing you will start getting the results they are getting.

You can also read my old article Importance of Stop loss to know more about using stop losses
Hope I was clear with it.

Happy Investing

Abhishek Ninaniya
The Stock King


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girijanms
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October 27, 2014 at 2:04 AM delete

Sir, I was told my by broker that in Indian market the stop loss is valid for a day only. i.e. to put stop loss every day, which is nearly impossible, when you plan to hold for some time. Greatly appreciate if you can suggest an alternative in this regard. Regards/Girijan

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October 27, 2014 at 8:45 AM delete

I use sharekhan and they allow stop loss valid for next 45 days, provided they are withing a specific range means u can't put stop loss below 50% cmp it has to be in 20-25% range of cmp and once i enter a stop loss on vtd basis it gets in to the market automatically every morning i receive confiramation messages for them evey morning that my orders have been placed

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October 27, 2014 at 9:16 AM delete

Very insightful. A must-read for start-up investors like me. Thanks a lot Abhishek.

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October 27, 2014 at 10:08 AM delete

You welcome bro........... :)

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ravi khanal
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November 5, 2014 at 11:51 PM delete

great advise !! thank you

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