A trader must be willing to accept risk and take losses. An inevitable consequence of reward is risk. To strive for reward implies the necessity of incurring risk. More risk does not always imply a commensurate reward but risk is inherent in any process where reward may be expected. Anyone not willing to accept risk cannot trade and should look for another endeavor. A person searching for a risk less trade should reconsider: Who would take the other side of a trade which offered risk but no reward? No rational person would, and anyone else who did would not be trading for long.

Risk taking does not necessarily imply taking on tremendous risks to make a fortune. Many traders are actually some of the most risk conscious people-they have to be or else they won't last too long. They are in the business of taking on risk for profit and must thoroughly understand risk and reward.

Other people enter the trading business to make money and cannot accept taking a loss. If a losing trade develops they might decide to put on a spread that has no real chance of being profitable, or simply refuse to exit the position to turn a trade into a long term "investment." These rationalizations and many others result from a simple fundamental problem in which the person will not accept a loss. One of the ironies of trading is that the more successful you are as a trader the more money you will lose.

Many people enter the business to make money but cannot accept taking a loss. There are many reasons for this. Some people believe they cannot be wrong and will not accept the fact the market does not agree with their view of the world. They decide to hold onto the losing trade and wait until the market sees the error of its ways, which will eventually make the trade profitable. Others simply refuse to trade, because they perceive a losing trade as a failure in themselves or an aspersion on their integrity. Even though these perceptions and attitudes are incorrect, they are beliefs many cannot come to grips with.

There are usually two kinds of losses which occur. Some losses are the result of human mistakes for a variety of reasons. You must be willing to accept the fact that you will make many mistakes in trading. Mistakes are an inevitable consequence in any learning process. There is always so much to understand about the markets. Never be afraid to make mistakes as long as the errors are not severe and are part of the lessons of trading. You will soon learn to minimize the impact of these mistakes which inevitably occur.

As the trader becomes more proficient the losses will still occur. However, these happen more often from the probabilities of the market, and are simply part of the business of trading. Any trade, no matter how well thought out, has a chance of becoming a loser. Many people think the best traders don't lose any money and have only winning trades. This is absolutely not true. The best traders lose a lot of money, but they eventually make even more over time. Trading is a business of making and losing money. Anyone wanting to make money must accept the fact they must risk and possibly lose money in the process.

Trading is a lot like boxing. A good boxer is someone who can throw a good punch, and, just as important, someone who can take a lot of good punches. Be prepared to take a lot of hits in trading. They are an inevitable part of the process of winning. Part of the joy and appreciation of life comes from the awareness and experience of sorrow. Just try to keep the hits minor and not knockouts.