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The Little Book of Market Wizards: Lessons from the Greatest Traders by Jack D. Schwager

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Chapter Twelve

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Losing Is Part of the Game

The Link between Confidence and Taking Losses

Closely related to confidence is the idea that losing is part of the game. Linda Raschke exemplifies the mind-set associated with this perspective. Raschke initially enjoyed a successful career as a floor trader before injuries sustained in a horse-riding accident forced her to abandon floor trading and trade from an office instead. Raschke then continued to be a consistently profitable trader in her ensuing years as an off-the-floor trader.

At one point in our interview, Raschke said, “It never bothered me to lose, because I always knew that I would make it right back.” Superficially, that might sound like an arrogant, egotistical comment. But that is not at all in keeping with Raschke’s personality. She is not bragging about her trading. Effectively, what Raschke is really saying is: “I have a methodology that I know is going to win in the long run. Along the way there are going to be some losses. If I lose now, I will win subsequently. As long as I stick with my methodology and keep doing what I am doing, I am going to come out ahead.” She is saying that losing is part of the process and that a trader needs to understand that to be successful.

Now, if you know you have won the game of trading before you start, then there is no problem taking a loss, because you understand that is just ...

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