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Are You Trading Not to Lose?

The opening bell just sounded and you are putting on a trade. You’ve got your plan established…you’ll buy the demand level on the 60 minute chart of the NQ E-mini that you analyzed yesterday. The price action on the chart is confirming the plan with an overnight low that coincides with the demand level that you established. You have your entry, target, stop and exit planned. After you enter you become gripped with anxiety and fear because the price action is inching toward your stop and is falling beyond the levels that you picked. You begin to second guess your plan and in a fit of doubt you exit the trade as the tick momentarily went to break-even. As you sit on the sidelines, you are feeling some temporary relief because you are no longer anxious, but a little later you’re feeling really stupid as you watch the price action turn up just where your analysis and plan had indicated. For the next 15 minutes you watch as it hits what would have been your target. You “would have had” a nice profit, but your self-doubt has caused you to “trade-not-to-lose” again; and snatched defeat from the jaws of victory – again!

Like most emotions, doubt is normal. It is when doubt takes over your mind and influences behavior that you must watch out for … and you must be careful as this could be foreshadowing a much more dangerous core issue. Larry Wilson in his book “Play to Win” asks whether your orientation to life is a play to win strategy or playing not to lose. Allow me to briefly explain. A playing not to lose strategy is based on the need to remain in your comfort zone and constantly look for temporary emotional relief by giving in to impulsive behavior and hoping you get the results you want. Things must come easily when playing not to lose. People with this strategy are constantly looking for the magic bullet or the quick fix that will create results out of thin air with no regard for their development. The philosophy of playing to win on the other hand is about the notion that life is growth, that courage and meeting the challenge are the harbingers of success. It is about commitment to excellence and a belief that learning (both about the market and the unconscious faulty ego driven beliefs) is critical for both professional and personal effectiveness. The core maps (your mental models that filter perceptions) of playing not to lose are driven by fear and greed. These emotions are attached to deep seated limiting beliefs about yourself and out of these limiting beliefs come thoughts. Thoughts similar to the following; “…I must get out of this trade, I can’t possibly allow any losses that I can prevent; that would mean I’m wrong and being wrong is for losers. Conversely, the core maps of a person playing to win reflect a belief that losses are a part of trading, that every small loss gets you closer to a big win; and that there is an abundance of opportunities, that they don’t have to worry about being wrong and impulsively exiting one trade because there will be another, and another after that..

Playing to win also entails the search for objective reality and holding on as you would to a life jacket in a stormy sea; a reality about what the charts are showing and what is going on in your thinking…you’re not paddling up the river of “denial.” A playing not to lose strategy is closed with limited alternatives; it blames others or outside influences first and seldom looks inside to identify issues that are negatively affecting results; this strategy promotes irrational thinking. The play to win strategy owns all results by using techniques like journaling to find out what is and is not working. The play to win trader is prepared to use protocols and effective routines in order to develop skill oriented habits and ensure sustainable success. This strategy is intellectually and emotionally honest along with mustering the enthusiasm and energy necessary to vigorously take on trading weaknesses, but you can’t take on a weakness that you either don’t know or don’t understand. Playing not to lose encourages erratic and illogical behaviors, while looking for the easy win often leads to putting large positions at risk and reneging on commitments to established rules – if they have rules at all. The play to win strategy recognizes that trading necessitates losses and that effective long-term winning means managing risk, having an iron clad commitment to rules, goal-setting, planning and methodical, smart trading. The play to win strategy is winning the psychological war with yourself, one battle at a time – “going as far as you can with all that you’ve got” in a growth oriented, fun, honest and healthy way.

Your issues, obstacles, and problems that plague your trading must be treated like an infestation in your home, you want to know if the cockroaches are there so you can weed them out and get rid of them. That’s why the “Thought Journal” is a critically important addition to your tool belt. Most of you already know that smart trading means tracking and documenting your trades in order to get data on how well your trade plan is working. Similarly, you must also gain data on what you are thinking and feeling because this is how you uncover the unconscious issues that act as drivers to bad behaviors which bring on unwanted results. But you’ve got to be willing to dig deeply to find out; you must pull back the layers of the mental onion and face your issues so that with the right tools you can successfully resolve them.


Written by Dr. Woody Johnson, Online Trading Academy Instructor. Dr. M. Woodruff Johnson has actively and successfully traded stock options, forex and futures since 2000. He is the former Executive Director of the Kaiser Permanente, Watts Counseling and Learning Center. He holds certifications in Accelerated Learning, Neurosensory Development and hypnotherapy, and he is a Certified NLP Master Practitioner. Dr. Woody is also an Associate Professor and teaches graduate psychology courses at Pacific Oaks College and Ryokan College. He has provided clinical staff services in hospitals and community clinics as well. He has a passion for helping others to achieve their goals and get the results in trading and life that they desire. Dr. Woody has been using mind/body healing techniques both professionally and personally with much success for many years. He is the author of “From Pain to Profit: Secrets of the Peak Performance Trader.”


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