Psychology: Best Loser Wins
In Best Loser Wins, Tom Hougaard starts with a stat: about 90% of traders don't make money. His fix is to watch what that majority does and do the opposite.
"Why don't we observe what everyone else is doing, and then do the opposite of what they are doing?"
What he saw the losing majority do:
• Add to losing trades, because a lower price feels like a bargain
• Skip placing a stop-loss, because an open loss still has hope
• Take half profits on winners
• Never add to a winner
So he flips all four. He adds to winners, keeps a stop on every position, never averages down, and holds the whole position instead of half.
The number that stuck with me comes from 43 million trades placed by 25,000 retail FX traders. 62% of those trades made money, and the group still lost, because the average loss was nearly twice the average win.
I call it the Costanza method.
