Hey hey: what's up my friends, so in today's episode right i want to discuss why your losses are larger than your winners, so some of you might have you know, encountered this problem man right now, whenever i put on the trade, my losses are always larger than My winners, what's going on is this a conspiracy market is rigged. Progress against me stop hunting, so so, what's going on all right, so uh, there are a few reasons for this and i'll break it down for you step by step what they are and how you can. Actually, you know, fix this uh problem. So, first and foremost, the first reason is, i would say, a key psychological aspect of trading is that humans right we are not kind of wired for trading.

So, if you think about this, if you put on a trade and the market, you know moves against you. What's your thought process, you probably would think man right, i don't want to you know, take this loser on this trade. Let me hold the trade a little bit longer, so the market continues to move against you. So at this point you regretted man.

I should just book that small loss right now the market is even further against me. Tell you what, if the market moves slightly in my favor, if i get back to break even i'll, be a good boy and i'll exit the trade? The next thing you know the market collapse even more against you. So at this point you are flustered. You are panicking right.

The loss is so much right. Uh of your compared to the size of your trading account you're down like 50 of your account, and now the maximum threshold level of pain right is near its peak and you cannot take it anymore right. You know, and what you do is you exit the trade? Okay, so that's that's kind of explain why you incur large losses and, let's say the next few trades right. You know you put on a trade market starts moving in your favor, but the loss right that you incurred or a few trades earlier or the trades before is still lingering out there.

The emotions is still raw. So when the market moves slightly in your favor, you tell yourself you don't want to watch that winner become a loser, because you know you don't want to encounter another loss right that you have just experienced. So what you do is you quickly take profits right on a small, you know, small winner, and that explains right. Why, in a grand scheme of things right, it's common to see that you know you have small winners and large losers because of this kind of like psychological makeup right that you have as a trader and it's perfectly normal many traders.

I will experience this and it's kind of, like you, know the rights of passage to becoming a profitable trader, so don't fret about it next reason. Number two is this right: is that you're trading right? The way you manage your trade, your risk to reward is inverse. So what you have is that you have a very wide stop loss relative to your target. So, for example, you have like a 200 pip stop loss and your target is like maybe 20 pips.

So, in this case, clearly right, your losses will be larger than your winners. Yes, you will have you know frequent winners of 20 peeps, 20, 20 pips, but then you'll come a point in time where the market just didn't even give you a 20 pips and it moves 200 pips against you and your losses is just bomb huge right and That is because of the way you uh execute your strategies, because your stop-loss ride is wider relative to your take profit level, and this is something that attracts a lot of you know: forex traders into those expert, advisors, robots and stuff, like that they have a very Nice, smooth upward sloping equity curve with almost no drawdown, but when the 200 peak drawdown or when the losses incur, you can see that it wipes out a huge chunk of their profits or even more okay. So that's the second thing right: the inverse risk to reward that they they use in their trading, and the third thing is uh - is this right is that you are trading against the trend? So so, if you think about this right, if you're trading against the trend - and you are not sharp right with your risk management - you don't hit your stops fast enough. What's going to happen is that if the the trend continues higher and you're not fast to bail out with a trade, your loss can be pretty huge, because, if you're trading against the trend, it means that you are shorting in an uptrend and if the trend quickly, You know resumes up higher right break up to new high.

You can see that your loss right can escalate right pretty quickly and as for profits right as a counter trend trader in an uptrend, your profits are somewhat limited to the uh depth of the pullback. So if the pullback is shallow, you can see that your profit potential is pretty little. So this is another reason. If you're trading against the trend, you might encounter uh losses right which are larger than your winners.

So now solution: what can you do to kind of fix this problem so number one? The first thing i want you to do is to plan your exit, because, if you don't plan your exit, what's going to happen, is that the psychological makeup of a trader, your trading psychology - will lead you to incur large losses, and the reason is because you don't Want to lose you hold on to the trade too long, you end up holding it too long and you suffer a huge loss. So, whenever you put on a trade promise me that you have a plan level right that you will exit at your stop-loss, you will adhere to it, no matter what. So if you can do this right, once your loss is contained right, the large losses should be pretty much reduced to a minimum or even non-existent anymore. So the key thing is to have a plan exit, have a stop, loss adhere to it, and i can almost guarantee right that your large losses right, you will be eliminated almost completely right.

I have no idea. Sometimes you might break your rules right, so use proper risk management right, don't don't risk more than one percent of your account have a proper stop-loss level that you should eliminate most of your large losses. Next thing, what you can do is to also define right. Your risk to reward on the trade, the potential risk to reward on the trade, so, for example, uh, if you uh, let's say market, is in an uptrend.

It comes into an area of support in an uptrend and you want to buy at support. Let's say your stop-loss is 50 pips. That's fine, and the next thing you want to do is ask yourself right from your entry to to uh the swing high. Okay, how much profit potential is there and the reason why i reference the swing high is because the swing high in an uptrend is likely to face some selling pressure.

So that's a good chance right where the market from support right has a good chance of you know moving towards the swing high, because that is where you know, potential selling pressure could come in and push the price lower anything before that right. You know, i would say the market should have no problem. You know moving through it to the highs. So let's say your stop.

Loss is 50 pips. Then the next question you want to ask yourself right from my entry point to the swing high. Do i have enough profit potential to justify taking that stop or stop loss, because if from the entry to the swing high, it's let's say - 25 pips, then you're risking 50 pips to make 25 pips from a risk to reward standpoint, you're risking a dollar to make 50 cents, and if you if, if if the market hits your stop loss right, what's going to happen, is that in the long run again, your losses will be larger than your winners. So what you want to do is to make sure that, from your entry point to the target, profit could be.

Your swingline could be resistance. You want in right to be at least right. I don't know: what's your definition of a bare minimum, but at least let's say a one to one right. So if you risk 50 pips and your and your profit potential is at least 50 pips.

What's going to happen is that your losses and winners right will be pretty much. You know of similar size right. Let's say you raise 50 50 pips you're, risking a dollar to make a dollar, or let's say this time around your swing. High is 100 pips away.

You risk 50 pips to make 100 pips you're risking a dollar to make two dollars. So if you do this consistently in the long run, you realize that your winners will be larger than your losses. So the key thing is again right: uh plan your exit and identify favorable risk to reward trades right whenever you put on a trade right, basically, you know identify the potential risk to reward on the trade okay. So with that said right, let me do a quick recap.

Number one right, your trading psychology, your own trading psychology make up as a trader is, can cause you to incur large losses and to have small winners. Number two wide stop loss. Small profit target will also incur large losses and small winners. Number three trading against the trend might be another possibility, and, finally, a few solutions for you is to first and foremost plan your exit and also write, identify favorable risk to reward trading setups, so meaning right.

You you risking 50 pips, make sure that, from your entry point to the nearest target, you can achieve at least 50 pips or more so this way in the long run your risk to reward right. It's at least aligned with your i mean your your wrist reward. Is at least favorable to you and you should you know, have larger winners than losses in the long run. So with that said, i wish you good luck.

Good trading i'll talk to you soon.