Written by: thiccy
Compiled by: Chopper, Foresight News
2025 has been another year of intense volatility, yet many have suffered losses in their trades.
This article is not for those who consistently lose, but for those traders who were once steadily profitable, highly skilled, yet have given back significant gains this quarter.
One of the most painful experiences in life is watching months or even years of effort vanish in an instant.
In Greek mythology, Sisyphus, for defying the gods, was condemned to an eternal punishment: he must repeatedly push a massive boulder to the top of a mountain, only for it to roll back down each time he nears the summit, forcing him to start over. The cruelty of this punishment is unique, striking at the core of the human experience.
Trading is much the same. Unlike most professions, trading offers no guarantee of staged victories; one poor decision can destroy an entire career. This very characteristic has pushed many into the abyss.
When the "boulder" rolls down, people typically react in two ways.
The first type doubles down, trying to recoup losses quickly. They trade more aggressively, unwittingly falling into the trap of the "Martingale strategy": doubling the bet after a loss, hoping one win will cover all previous losses. This approach can sometimes work, which is precisely its fatal danger: it reinforces a habit that will inevitably lead to loss.
The second type becomes exhausted and quits the market entirely. These individuals are usually financially comfortable, leading cushy lives where risk no longer offers asymmetry. They console themselves by claiming the market has no more profit opportunities or that they are no longer suited for trading. They choose to exit the market permanently, effectively ending their trading careers themselves.
Both reactions are understandable but are extreme and fail to address the core issue. The real core problem is: There is a flaw in your risk management system. Most people overestimate their risk management capabilities.
Risk management itself is not an unsolvable puzzle; the mathematical logic behind it has long been clear. The real difficulty lies not in "knowing what to do," but in "persistently executing it even in the face of emotions, ego, stress, and fatigue." Aligning actions with intentions is one of the hardest things for humans to achieve. And the market will always mercilessly expose this cognitive dissonance from reality.
So, after a loss occurs, how does one climb out of the predicament?
First, you must accept this fact: you were not unlucky, nor were you treated unfairly. This loss was caused by a flaw in your trading process; it was inevitable. If you do not precisely identify and fix this issue, history will undoubtedly repeat itself.
Second, you need to fully accept your current net worth and avoid anchoring to past all-time highs. The impulse to "make the money back" is one of the most dangerous obsessions in the market. Step away from the trading screen temporarily and be grateful for what you have already achieved. You are still alive, still in the game—that is enough. Your goal now is not to break even, but simply to be profitable.
View this loss as tuition paid to the market; it helped expose a fatal flaw. This was a lesson you were bound to learn eventually; be glad you learned it before the stakes grew even higher. If you proceed correctly, you will look back on this moment with gratitude. Character is forged in adversity.
Identify the specific cause of the failure. For most people, losses are often due to factors like "excessive position sizing," "failing to set a stop-loss," or "not executing after a stop-loss was triggered." Establishing strict rules around risk and stop-losses can prevent the vast majority of catastrophic losses.
Constantly remind yourself: the only way to prevent the boulder from rolling down again is to adhere to these rules. They are the only barrier between you and the pain and self-loathing you are experiencing now. Without rules, you have nothing.
Give yourself ample time to mourn the loss. Shout, vent, even break something if you must—let the emotions out instead of bottling them up.
Most importantly, transform the pain into action. Trauma must be converted into structured rules and processes, or it will repeat itself.
This understanding of coping with trauma applies not only to trading losses but to all forms of loss in life. The two common reactions mentioned earlier are extreme because they often solve one problem while creating more new ones. If you cannot recover from a loss in a nuanced and precise manner, you will forever oscillate around the optimal solution, like a gradient descent algorithm with too large a step size, never converging to the correct result.
After Napoleon was defeated, he immediately began rebuilding infrastructure and preparing for the next campaign. A defeat is fatal because it destroys your ability to fight again. The primary task after a loss is to ensure that vulnerability is no longer exploitable by opponents and to restore optimal condition as soon as possible.
You need not seek redemption, nor revenge; don't wallow in self-pity, nor rage in anger. You must operate like a precision machine: patch the漏洞 (vulnerability), rebuild the system, ensure this error never happens again. Every failure you endure becomes a moat in your trading system—a moat that others must experience firsthand to acquire.
It is such failures that shape a person. Be grateful for their arrival, for they come to teach you important lessons; they are never meaningless. Allow yourself to feel the pain, but more importantly, transform this agony into motivation to ensure it never happens again.
These things are difficult precisely because once you find the right direction, the compound growth of wealth becomes inevitable. Finally, good luck.
