I will NEVER take a trade without having pre-accepted the potential for trade loss.
Because the fact is that MANY will lose.
Pre-acceptance of trade risk means that I am comfortable with taking the loss and will do so immediately without hesitation.
Pre-acceptance of trade risk means that I'm not overly concerned with the monetary loss and can keep my focus on the process of analysis and effective decision making.
My focus remains on process, rather than outcome!
Ask yourself before entry, "Am I comfortable with this trade losing?"
If you're not comfortable with this trade losing then you've likely not yet achieved sufficient confidence in your strategy, or you're trading with too much risk.
You will likely hesitate to take the exit, ensuring a greater than necessary loss.
And you will likely carry some psychological baggage into the next trade, increasing the chance of poor analysis or decision making and greatly increasing the chance of further losses.
Before any trade, pause to confirm:
- A full loss on this trade will not break any session drawdown limits.
- A full loss on this trade is PERSONALLY acceptable. I am completely comfortable taking the loss and moving on to the next trade.
Because if either of these are not true, then you have no business taking the trade.