Take your losses like Floyd Mayweather takes his punches and win!

It's in the mainstream! Mayweather running around, hugging Manny and defending throughout the fight of the century. But he still ends up the winner of the night taking home over 100 million dollars. 

In fact, there's a joke going around: It's not "fly like a butterfly sting like a bee" anymore. Now it's "run like a chicken, hug like a bear".

Anyways jokes aside, while I was watching the match early in the morning, I thought about how much I can relate to my own trading and with managing my portfolios risk. 

Expect the losses when you start trading like Mayweather expects puny punches

Like Mayweather, he can't be a boxer without taking the occasional hit from time to time. As for me I can't be a trader, without taking losses in the market.

I have a startegy with a track record that shows a win rate of 62% on average a year. So, I expect to take knocks in the market... But how I manage the losses, are a different story. 

You see I basically expect to take around three two losing trades for every five trades I take. But as long as I ride my winning trades longer than my losing trades, I’m sure to keep my portfolio on the up.

Adopting this attitude to your trading will prepare you for the potential losers and winners to come.  And you'll have peace of mind knowing that losing trades are part of your winning game plan. 

Make sure your "knocks" are small and easy to stomach

Do yourself a favour.  Go watch the boxing match again.  You'll see Manny throwing hundreds of punches at a time. But more importantly, you'll see how Mayweather defends himself from being injured or worse, knocked out.
And so he’s developed skills and has trained himself to handle the punches with ease.

With trading it's identical. You can either be knocked out your portfolio in just one trade or, you can manage your losses with the defence of a stop loss function.
The stop loss will get you out of your trade at a specific level, should the trade go against you. And so, you can limit your loss using the stop loss.

So before you get into every trade, know where to put your stop loss. Don't risk more than 2 to 4% of your portfolio per trade.  You don't know how many losing trades you'll take in a row. 

And whatever you do, put your reward level at least double of what you're willing to risk.  So you can grow your portfolio with being able to stomach the small losers. 

And always remember, "Wisdom yields Wealth". 

Timon Rossolimos
Author:          94 Top Trading Lessons of All Time

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