A short coaching segment from Kardec Trader explaining how to classify losing trades as "good" or "bad." The speaker recommends evaluating each loss against predefined risk limits, whether the trade adhered to the trader's game plan/playbook/strategy, and whether an entry signal was present; losses that violate these criteria are labeled "bad."
So let's talk about good losing versus bad losing. As I mentioned before, you will lose on trades, you will have losing periods and so on. Now, it's impossible to avoid that. But what we do want to identify is when we do have a losing trade, we want to put the big question mark. Was this a good loss or a bad loss? Now, the way I differentiate a good loss to a bad loss is I look at the following. So if I have a trade, I ask myself, did I lose my predefined risk amount? Was this trade part of my game plan? Was this setup part of my playbook? Part of my strategy? Did I have an entry signal with this setup? These are some of the questions I like to ask when I do look at a trade. Now, if I do look at a trade and that trade did not fall under my entry signal, my setup, my game plan, my risk tolerance that I typically set out, that typically comes out to be a bad losing trade.
