When I first started trading stocks back in college, I had the mindset that every trade should be profitable and losing money on a trade was a cardinal sin. In theory this is a wonderful philosophy, but no trader in the world would succeed for long with this kind of unrealistic thinking.If you are thinking about trading, you have to ask yourself how you feel about taking losses and losing money for long stretches at times.
Know Thyself
The best way to find out what your risk tolerance stands is to actually lose money in the market. You will find out very quickly where you stand and if you can succeed as a trader. Back in college I actually had a high risk tolerance and was willing to be more aggressive in my trading. Thus I was able to handle large swings in my accounts.
This is not the case anymore for me anymore. As I got older, my risk tolerance decreased and I am much more conservative now. This doesn’t mean that I won’t buy a volatile stock, but the constant ups and downs of daytrading are not for me anymore. I am happy that I realized this and stopped using a trading style that was no longer suitable for me anymore. The worst thing you can do is try to be something you are not in the markets because you will get crushed.
The main point I am making now is that I actually am a little scared to lose money these days in the market, which is why I have dramatically curtailed my trading activities. It is important to be realistic with your expectations and your tolerance for losses. Honesty is best policy and that is nowhere more true than in the market trenches and yourself.
Scared Of Losing Money? Don’t Be A Trader is an article from: 
