If there are winners there are bound to be losers. That’s life and that’s also Forex trading. There are all sorts of reasons why traders become losers rather than winners. To take a few: their approach may be wrong, they may not understand how the market works or know the key indicators and key numbers and the best trading times. They may be risking too much and generally “not on the ball”.
Whatever the reason for a loss – unexpected market events or just an elementary mistake, no one is going to feel good after they’ve lost money. And if you get that “Groundhog Day” effect, with the same dire results day after day, bang goes your confidence and your future attitude.
What are frequent reactions, especially from novice traders, to losing in Forex? Firstly there is a tendency to get fired by the heat of the moment, to “ride off in all directions”, make trades of all kinds without a pre-plan and end up losing even more. Secondly, as an alternative reaction, the novice and unsuccessful trader may now be so scared of incurring any more losses that he becomes inhibited and makes every excuse to avoid trading.
Losing can be a big step, perhaps an essential step, towards winning only if the loser has a real desire to become a winner, knows that he has to think seriously and learn from his mistakes. That doesn’t mean he should spend his time worrying in a blue funk – the message must be absorbed in the right frame of mind.
The more a trader understands the market and the way that it works, the more likely he will stop being a loser. He should take a close view of the various factors that caused price movements. Such analysis will help the development of a more realistic trade strategy when the next similar situation crops up. It doesn’t matter whether a deal makes money or loses money, the sensible trader should will carry out a review of his trades and learn the important lessons from them. That way he cannot but improve his trading strategy and system and gain a valuable sense of perspective. As he learns about different patterns in the market and how they can be countered, he will be able to bring down the number of losing trades over a period of time.
There are three basic steps in the process of learning: analysing the trade; reviewing every aspect and then when all the information has been carefully digested, you can be ready to make changes and adjustments and try and rectify the mistakes that may have occurred. Every trading deal, good or bad, should become a well-documented learning experience. Following that, the future impact of this three-step procedure should become a memorable experience which will indirectly speed up the learning process.
Many years ago Rudyard Kipling wrote “If you can meet with Triumph and Disaster, and treat those two impostors just the same” and that often quoted couple of lines is worthy of being pinned up over each trader’s desk. The wise trader should not fall prey to greed – getting the quick buck in at all costs – or to fear of activity in the market because of the risk of losing money. He will also be good at managing his money and above all ensure that he does not overtrade.
The greatest lesson from a batch of losing experiences is that self-control is the most vital element of all. Think, reflect, learn and review and a losing experience to start with could be a really positive happening. You can lose money but don’t lose the lesson.
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