Finding yourself with trading losses, especially big ones, can undermine your confidence. Here's how you can bounce back.

Step 1. Stay away from the market.

These emotions can be very strong and most likely new for you but trust me everyday hundreds of traders go through them. Hence, you are not alone and understand that this will all go away with time.

For some people, it can take a couple of days and for some, it can take a week but eventually, we all come out of that extreme negativity. The pain would still be there but at least the magnitude would have come down.It is advisable to avoid the market during this stage.My advice is to empty your trading account and put the money in some fixed deposit so that you don’t make any impulsive decisions.Take a break from the market.Once we start feeling sane again, let’s say a week or so later time.

Step 2. Accept full responsibility for the losses.

When we incur a loss, it’s very easy to blame it on someone or something else because it makes us feel better. People tell me all the time that it is not their fault. It was the guy on TV, and they just followed his advice and that they shouldn’t have listened to him and that all these TV pandits are frauds.

Some say that it was not their fault and that his friend or someone on Telegram said it was a sure profit trade and they gave their account to someone else, and they incurred a big loss.

Others say that the stock was manipulated, and it was their broker’s fault.Ok, let me be blunt for a second because brutal honesty is what is required at this point.

The guy on TV gave the recommendation but did he also make you greedy to take such a big position?

The Stock may have been manipulated, but did it force you to stay in the trade when the losses were small? If the loss of 10 lakhs was at 20k or 30k at that time, why didn’t you exit at that point?

If the person took the trades on your behalf, who gave him the credentials of your account? You did because he promised to double or even triple your money.No matter what story we tell ourselves, the fact is that it was our money and so it was our responsibility. Plain and simple. Don’t try to blame someone else.

The bigger problem with not taking responsibility is that you will never learn from the mistake and if you don’t learn anything, forget about recovering from the loss, you will most likely incur another loss and might be even a bigger one the next money.

It’s your money and hence it is your responsibility. It’s time for honesty not with your family, not with anyone else but with yourself,we get into a habit of lying to ourselves and that’s a very sad situation.So, as much as it hurts, say out loud that I made a mistake, and I will never repeat it. It is okay and there is no shame in admitting a mistake because everybody makes a mistake.

Step 3. Learn from your mistakes.

Traders need to be able to recognize their strengths and weaknesses—and plan around them. After any loss, regardless of how big or small, I always perform a post-trade analysis to understand what to do differently next time. Did I miss something in my research? Did I let my emotions drive my decisions?

Let's say you tend to make buy and sell decisions tied to fundamentals, and only buy stocks that meet very strict valuation criteria. You might then overlook some early-stage growth companies with the potential to generate significant gains. Or let's say you prefer trading the headlines—you might grab some flashy stocks and get burned, only to see more risk-averse traders do better. In both cases, the mistake was the same rigidly sticking to a single approach left the trader blind to some good opportunities. And in both cases the lesson is to be open to multiple methods of selecting and analyzing prospective trades.

Step 4. Do a postmortem of what happened.

After a week or so, the emotions come down and reality sets in. That’s the time to be brutally honest with yourself and do a postmortem of what happened and why.

There are 3 reasons why people incur big losses:

They don’t have any strategy.

They are just doing trading based on their hunch, gut feeling, or some tips.

They don’t have emotional control.

Greed and excessive leverage influence them to trade

They don’t understand risk management.

Step 5. Fix the problem.

If the problem is a lack of knowledge, fix it. Learn trading the right way and start paper trading. There is no shame in saying I don’t know.

Trading is a skill that needs to be learned and so acquire that skill.

If the problem is emotional control, get a mentor who can handhold you.

If the problem is lack of time, change your timeframe of trading.

If the problem is a compulsion to trade, then you need to take some more serious steps.

The one thing that changed for me as I asked myself, “Am I playing a loser’s game or a winner’s game”? Why is there a big loss? Why is it that I don’t see a big profit? There must be something wrong in the way I am approaching it and that’s when I went towards option selling, algo trading and other improvements in my trading methodology. I wanted a systematic way of trading with no emotions, just rule-based and that gave me the edge that I needed. So, once you get the edge, follow the strategy and be consistent in your methodology.

Step 6. Forget about recovering the money and focus on making money.

What does it mean?

There is no recovery of loss as that money is gone.

It’s not like I can ask the market to refund the money. I am not going to get it back and that is certain.
That loss is all done as it has already been incurred and so recovering the loss is the wrong mindset. Because it puts unnecessary pressure on time and amount. If you say that you must recover 5 lakhs in 1 month, that causes all the problems. Because now you want to make 100% returns in 1 month, you take excessive risks and try to buy a lot of options to hit a lottery. What do you think is going to happen? Like other lottery buyers, you will also lose money.Hence forget about recovering and imagine for a second that the loss did not happen.

In that situation, what would have been the right way to approach the market? You would be eyeing a more reasonable return. There is a saying in the stock market that “Get rich slowly or get poor quickly- your choice”.

Step 7. Slowly start to rebuild.

You might be tempted to jump back in with both feet but consider taking on smaller positions than you're used to. For example, if under normal circumstances you never risk more than 5% of your trading portfolio on a single trade, after a big loss you might reduce that to 2% or 3% until you feel you're on solid ground. This is especially true during periods of high volatility, when major market swings can shake you out of the market quickly.

Step 8. Scale up and scale down.

In a similar vein, instead of purchasing, say, 100 shares of a new position, you could slowly scale up by purchasing 20 shares to start, then adding to your position anytime the price dips. The same goes for selling a winning position: You could scale down by selling in 10- or 20-share increments if the stock is still climbing or if you've reached your threshold for a single position in your portfolio. In both cases, you would be limiting your risk and your potential regret by trading in pieces. Setting price targets for your exits in advance, even the incremental ones, can help with this strategy.

Step 9. Use limit and stop orders.

Limit and stop orders can help take some emotion out of your trading and help you stick to your exit plan. As a reminder:

Limit orders let you specify the highest share price you're willing to pay or the lowest at which you're willing to sell. In either case, the trade will occur only if it can be filled at your preferred price or better.

Stop orders execute and become market orders only when a specific price level is reached or exceeded. This does not guarantee an execution price; the trade may occur below, at, or above the stop price.

These tools can help reduce the impulse to hang on to a position for longer than you planned or purchase a hot stock for more than you believe it's worth. That said, limit orders do not guarantee the order will fill, and stop orders do not guarantee you'll get the price you set.

Step 10. Don’t give up.

Almost every successful trader I know has been through at least 1 big loss in the initial phase of their trading careers and most of them have taken at least 4-5 of them. Some of them blew up their accounts several times before they made it, but the common theme among them is that they didn’t give up.

Hence, don’t give up on the stock market. If you had a bad experience with trading and decide to leave trading altogether, that’s fine and understandable, but don’t quit the stock market.

Start with investing. I know it sounds boring, but more wealth is created in investing than any other line of business I am aware of.

Again, I would repeat the same saying mentioned earlier – “Get rich slowly or get poor quickly- your choice.”

Multiple confirmation in trading

Check your levels of important support & resistance.
Always check volume at the time of entry when there is any breakout or breakdown.
Always keep in mind psychological numbers like 46000,46500,47000,21000,21500,22000 etc.
Check open interest, always trade with trends.
Candle size and body, for example bullish breakout green candle do not contain any wick or shadow.

Conclusion

So, guys, as I mentioned in the beginning, I don’t have a magic formula. I only have real-life experience to share and to conclude, I will say one last thing…

“Tough times never last, but tough people do.”

FAQ

How do you accept losses in trading?

8 Ways you can use trading losses to improve your trading.

Accept responsibility.
Review your position sizing.
Analyze each loss.
Use a stop-loss level.
Review your exit strategy.
Control your emotions.
Use a trading journal.
Ask yourself some simple questions.

Loss Recovery plan & Multiple confirmation in trading