DAY 37: Mental care when carrying a loss

In DAY 36, we focused on mental blocks when aiming to increase profits and learned ways to overcome the so-called “chicken partial take-profit” mindset.Mental blocks when aiming for profitand countermeasures to overcome them.
Today, DAY 37, we will cover the topic of **“Mental care when holding losses.”** Losses in trading are inevitable, buthow to maintain mental balance when drawdowns continue or a string of losses occursis a crucial task for lasting success over the long term.
Let’s review together methods to prevent mental collapse such as “getting nervous and trying to recover and losing again” or “losing motivation after a big loss.”

1. Why does the mind shake when holding losses?

1. Prospect theory (loss aversion bias)

   • Psychologically, people feel the pain of losses more strongly than the joy of gains.
   • The urge not to realize a loss and the impulse to “recover it” naturally intensify.

2. Repeated losses increase self-denigration

   • A string of losses in a short period leads to thinking “I have no talent” or “I can’t recover this,” making it easy to quit calmly.
   • When calm judgment is unavailable, risk-taking becomes excessive.

3. When capital decreases significantly, it becomes scary to look at the market

   • The more drawdowns there are, the more one fears “I might go bankrupt,” leading to avoiding the market or reckless entries.
   • Prolonged mental collapse often results in quitting after a single loss.

2. The vicious cycle that occurs during losing streaks and drawdowns

1. The urge to recover losses

   • During a losing streak, traders raise lot sizes hoping to recover, which can lead to a “double-down disaster.”
   • Prospect theory says that after losses, risk-seeking behavior increases.

2. Delays in stop-loss

   • Hope that “it will come back if I wait a little longer” leads to getting stuck or forced stop-outs.
   • Postponing the painful reality expands the losses.

3. Losing streak → ignoring rules → further losses

   • If confidence in rules is lost, gambling-like behavior such as impulsive entries or abandoning stop-loss lines increases.
   • Conversely, avoiding trades altogether and missing opportunities worsens the cycle of hurry.

3. Mental care methods during losses

(1) Take a break from trading and distance yourself

• When anxiety such as “What if I lose again tomorrow…” is high,close positions for a while and step away from the market.
• Right after a losing streak, it’s easy to lose calm. To reset,organize your notes until the weekendto refresh your mind and body.

(2) Review money management

• If the risk is too large from the starteven a 1–2 losses can deal a big mental blow.
• If risk is kept within 1–2% of capital, drawdowns are less likely to lead to bankruptcy.
• If you can’t stand drawdowns,lower the lot size or change the strategyas needed.

(3) View stop-loss as an “expense”

• In business terms, stop-loss is a necessary expense that ultimately helps preserve profits.
• Don’t deny stop-loss as wasteful; accept it as “the result of the strategy operating according to its rules.”
• Discretionary trading adds emotion, but if you can mechanically shift perspective, your mind will feel lighter.

(4) Recall success experiences or accumulate small wins

• Review past winning tradesand monthly profits to reaffirm that “I have the ability to win.”
• If you minimize lot size and still win small trades,the mental state tends to recover gradually.

(5) Look beyond mental factors and address other causes

• Lifestyle disruption, sleep deprivation, lack of exercise, work or family stress,and other non-trading causes can also shake your mental state.
• Regular exercise and hobbies to relieve stress and switching on/off can contribute to mental stability during losses.

4. Concrete form of the mindset when facing losses

1. Rule of “watch the market without rushing”

   • If you are on a losing streak, do not enter new trades for at least one day, and after a losing streak, close the chart for a whileto block impulsive gambling actions, etc., decide rules in advance.
   • Block gambling behavior of entering trades in a fit of anger.

2. Write down your reasons for not being able to cut losses

   • Making emotions concrete helps you realize you are often enlarging losses with the same pattern.

3. Operate on/off or take breaks based on drawdown rate

   • Example: “If capital drops by 10%, pause expert advisor and reduce discretionary trades to half to recover mentally.”
   • If using multiple logics,do not force the underperforming logic to run.

4. “Locking in losses” can be an investment in future success

   • Even after a loss, view it as protecting funds and psychology for the next opportunity..

5. Preventive measures to avoid losing streaks

1. Technical and fundamental checks
   • When losses accumulate, re-check whether you missed any indicators or news that could be causing them.Identify factors contributing to losses.
2. Start with smaller lot sizes
   • Starting with large lots causes big damage on the first loss.To prevent a big accident, gradually increase.
3. Limit monitored currency pairs
   • Trading too many pairs leads to haste and confusion and more losses.
   • Set a period to focus on preferred pairs to stop losing streaks.

6. Summary & next forecast

Summary

1. Patterns of mental collapse during losses: reckless trading from the urge to recover, stop-loss refusal, and self-destructive behavior after losing streaks.
2. Countermeasures:
   • “Take a break,” “review money management,” “treat stop-loss as an expense,” “reconfirm success experiences.”
   • If losing streak continues,pursue small, low-risk wins to accumulate winnings.
3. Preventive measures for losing streaks and drawdowns:

Next topic (DAY 38): How to handle winning streaks and losing streaks

• Next time we will go a step further from “mental care when holding losses” and discuss how to control yourself during sustained winning or losing streaks.Winning and losingstreaks will be examined.
• During winning streaks, excessive confidence is dangerous; during losing streaks, excessive slump or chasing losses is dangerous—let’s examine concrete countermeasures for these situations.
• Please look forward to it!

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