Psychology and Losing Runs

Probably the most difficult aspect of any form of gambling or trading is handling the losing runs. Sadly the reason 98% of gamblers lose is not because they are not able to select winners or judge form. It is because they give up on a strategy when they hit a losing run.
So in essence the vast majority of punters are getting out at the bottom of the curve so to speak. As soon as a system loses, they give up, exiting at a loss and moving on to the next big thing or in-form tipster. Then when that one hits a losing run, they give up and move on to the next one and so on.
All this means is that they are continually running up losses as they jump from one thing to another.
The 2% of gamblers or traders who succeed are those who have a good strategy and stick toit over the long term. They accept the losing runs and don’t go chasing their losses or jumping on to a new strategy. They know their approach works but that statistically you are guaranteed to hit a losing run at some point.
This, coupled with good money management, is the most important lesson people can learn when trying to become a successful investor.
Even though the systems in this manual have good strike rates, they will hit losing runs onoccasion. It can be immensely frustrating and there will be a temptation to give up.
Figure 5: a losing run can be frustrating and tough to handle. It is important to remain calm and stick to your system.
My advice is to keep calm, stick the rules, don’t go chasing losses and wait for the next opportunity to come along. Most important of all, always stick to safe money management and never risk more than you can afford to lose.
If you aren’t able to do these things, then you will probably need to ask yourself if betting is for you.

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