Winning is all about losing...

Growing up on video games, I got used to losing – a lot. Anyone who has ever played Contra could tell you that the losing was just about the only thing you could do in that damn game.

Aside from being perpetually frustrated, I did learn an important lesson from that menial and tedious video game: sometimes losing is an obstacle, not an end to the game. It may not be true about everything, but it sure as hell is true about the stock market.

Face it, no matter how good you are, sometimes you will be wrong when it comes to the market, just like sometimes the alien will shoot you a new skull-hole. Sometimes a stock doesn’t do what it should when it should. That’s why stocks scare a lot of people, take money from some and make a few very rich. The few know that you have to play the cards right.

Be prepared to lose. Count on it and play the game accordingly. Every loss can make you stronger, provided it is small and you learn something from it. With the proper risk management plan, you don’t have to worry. Basically, make sure you make way more money when you are right then when you are wrong and you can come out ahead even when you are wrong half the time. It’s a little more complicated than that – but not by much.

So in my next installment, I’m going to plug into that Contra losing to win mentality when I touch on risk management.