Juan Maldonado
Elliott Wave Street
When it comes to trading, most people only focus on the right trades—those moments when everything aligns perfectly, the market moves in your favor, and profits roll in. But let me ask you this: Who doesn’t win when everything goes according to plan? The real question is, how do you handle the moments when trades go wrong?
In the world of trading, there’s a harsh reality that many avoid discussing: you’ll face losing trades, and that’s where the magic happens. It’s not about avoiding losses entirely but managing them effectively when they come.
What most courses don’t tell you
If you’ve ever taken a trading course or read books on the subject, chances are they focused on examples of successful trades. It’s easy to show how to win when everything goes well. However, the real test of a good trader is how they handle those challenging moments when the market turns against them.
Imagine this scenario: you buy into a trade expecting the price to rise. Instead, it tanks. What do you do? Do you panic and cut your losses too late? Or do you have a strategy that helps you minimize the damage and move on to the next opportunity? This is where the difference between an average trader and a successful one becomes clear.
Risk management: The true foundation of trading success
Most traders fail not because they don’t know how to win but because they don’t know how to manage their risk when they lose. Statistics from regulated brokers show that between 70% and 90% of retail traders lose their money. Why? Because they let emotions—especially the desire to make quick money—dictate their decisions.
One of the most common questions is, “What’s the secret to succeeding in this business?” And while many factors are at play, I always start with Rule #1: Don’t Lose Money. As Warren Buffet famously said, “Rule #2: Don’t Forget Rule #1.”
Easier said than done?
It might sound simple, but applying this principle in real-life trading is challenging. Many traders fall into the trap of letting their ego take control. They refuse to accept they’re on the wrong side of a trade, which leads them to make more significant mistakes, resulting in even more considerable losses.
This is why managing your emotions and sticking to your strategy—especially in moments of uncertainty—is crucial. It’s not about avoiding losses altogether. It’s about learning to limit those losses and keep them from blowing up your account.
Want to learn how to minimize your losses?
In the accompanying video, we’ll break down some of the best strategies for minimizing your losses in trading. You can start using these techniques right now to protect your capital and keep you in the game longer.
Remember, the best traders don’t win because they never lose—they win because they know how to manage their losses.
DISCLAIMER: No Earnings Projections, Promises or Representations
Trading currencies, stocks, futures, and options implicate significant risk of loss and is not suitable for every investor. The quotes of financial markets may fluctuate, and, as a result, clients could lose more than their investment. The highly leveraged of futures trading means that modest market movements will have a greater shock on your trading account, and this can go against your trading capital, that can result in considerable losses or can benefit your trading capital, resulting in significant gains.
If the price of any financial instrument moves against you, you may result in more massive loss than the original money deposited into your account. You are entirely responsible for all the risks from your trading decisions and resources you use and for a trading system that you are using. You should not make any trading decisions unless you understand entirely the nature of the trades (transactions) you are entering into and your exposure to loss.
If you do not fully understand these risks, you must find independent advice from your financial advisor.
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All the content on elliottwavestreet.com should not be used as advice or recommendation of any type. It is your responsibility to confirm and decide which trades to make based on your analysis. Trade only with risk capital; that you can afford to lose, and that will not negatively impact your lifestyle and your financial obligations needs. Past results are no indication of future performance. The information found on this website should not be interpreted as an implied promise or guarantee.
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Editors’ Picks
EUR/USD remains below 1.0800 amid rising odds of a less dovish approach from the Fed
The EUR/USD pair holds steady around 1.0790 during Monday's Asian trading hours. However, the pair may encounter headwinds from a stronger US Dollar, as recent upbeat economic data from the United States has strengthened expectations for a less dovish approach from the Federal Reserve in November.
GBP/USD remains depressed around 100-day SMA on stronger USD, holds above mid-1.2900s
GBP/USD edges lower at the start of a new week amid broad-based USD strength. Expectations for a less aggressive Fed policy easing continue to underpin the USD. Bets for more BoE rate cuts weigh on the GBP and exert pressure on the major.
USD/JPY pares gains to near 153.50 amid Japanese political uncertainty
USD/JPY retreats to near 153.50 early Monday after rallying hard to 153.90. The Japanese Yen fell to a fresh three-month low against its American counterpart after Japan’s longtime ruling party lost its majority for the first time in 15 years at Sunday's national election.
Editors’ Picks
AUD/USD stays weak below 0.6600 on US Dollar demand
AUD/USD is trading on the back foot below 0.6600 in Asian trading on Monday. The pair shrugs off China's stimulus optimism and a risk-on mood, as the US Dollar remains in demand and drags it lower amid a quiet start to a big week.
USD/JPY pares gains to near 153.50 amid Japanese political uncertainty
USD/JPY retreats to near 153.50 early Monday after rallying hard to 153.90. The Japanese Yen fell to a fresh three-month low against its American counterpart after Japan’s longtime ruling party lost its majority for the first time in 15 years at Sunday's national election.
Gold turns south below $2,750 amid risk appetite, strong US Dollar
Gold price returns to the red below $2,750, snapping the two-day winning streak in the Asian session on Monday. However, the precious metal's downside might be limited amid the ongoing geopolitical tensions and uncertainties surrounding the US presidential election.
Week ahead: A decisive week for USD with NFP and more. BoJ meets
A crucial week lies ahead with US jobs report, advance GDP and PCE inflation. The Bank of Japan is expected to hold rates, but will it flag a year-end hike? Flash GDP and CPI data for the euro area are also hotly anticipated. Australian quarterly CPI and UK budget on the agenda too.
US elections: The race to the White House tightens
Trump closes in on Harris’s lead in the polls. Neck and neck race spurs market jitters. Outcome still hinges on battleground states.
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