I hate taking a loss as much as the next trader-they cost you money, and it’s that market’s way of telling you you were wrong in one way or another.Bad entry, bad stop, wrong direction, somewhere your analysis was wrong.For this reason, many traders don’t get out of losing trades-as long as you are still in the trade, there’s a chance a loser will come back and bail you out.As I’ve gained experience trading, I have become more impatient with losing trades.As a swing trader, I want my trades to go in my direction right away.Swing trading is about momentum. If momentum isn’t goingyour way, the odds are good it will be going the other way.When I enter a trade, I generally like to use a $350 to $700 stop per contract, and put this in initially as a disaster stop. However,if I’ve been in a trade for a while and the market ismoving against me, or not showing a profit, I often liquidate and take a smaller loss, or sctratch the trade.Does this cost me some winners?Sure, but taking smaller losses helps to preserve equity, and I have confidence in my ability to find trades, and preserving equity keeps you in the game for when the next big winner comes along.
