How To Handle A String Of Losses
Everybody hates to lose and unfortunately no one is blessed with the ability of foresight, therefore losses are an unavoidable part of trading. When we enter a trade we will either be right, or wrong, and even if we broke-even we'd still be classed as being wrong - as nobody enters into a trade just to break-even! When unsuccessful traders encounter a string of losses they begin to engage in self-destructive patterns that help them escape the pain they are experiencing. In this article we bring to light these self-destructive actions that can help you realize what you are doing before it takes hold of your physical health. If you find yourself already engaged in these patterns hopefully this article can help you to get you back on track as quickly as possible. The Destructive Patterns If you find yourself caught in a string of losses or a bad performing week/month be sure to monitor your behavior. It is during this time that you will be at your most vulnerable. You will begin to indulge in activities that at first seem harmless, but upon excessive use (or in time), begin to cause physical damage to your health. Ask yourself the following question: during during drawdown periods do I find myself over-indulging in these activities: > Food (especially junk food - eg. chocolate, ice-cream, chips)? > Sex (includes viewing pornography)? > Alcohol? > Drugs (includes excessive smoking)? > Laziness (find it difficult to wake up in the morning)? > Entertainment? All of the above taken in excessive doses can be detrimental to your own physical health (some even in small doses!). These activities above during your losing period are only covering up the pain of confronting the true issue, and your body tries to rid the emotional pain by trying to "fix" it with physical pleasures. Unfortunately it is going about it in the wrong way, so what should you do? Firstly... REALIZE WHAT YOU ARE DOING AND STOP IT! You need to realize what you're doing and you need to STOP doing it immediately! You can either decide to stop, or you'll be forced to stop when your body eventually breaks down and prevents you from any form of movement. It will be much more beneficial to you in the long-term if you can decide to stop *NOW*. Once you have stopped you now need to figure out a way to solve the pain - not by cutting out or neglecting it, but by staring it in the face. Bring your problems out into the light, be honest with yourself. There can be no growth without pain, you are experiencing the emotional pain, now it is time to find the error and therefore your growth. Begin Your Review The review process begins in two separate areas: You & Your System. Here are some checklists for you to go through to find out where the problem could lie: "YOUR SYSTEM" CHECKLIST > Was your system thoroughly tested prior to trading it (or paper traded if you do not have the capacity to programme your system into backtesting software)? > Did you test with out-of-sample data? > Do you even have a system???? If you do not, how do you even know if the method that you are trading is even profitable?? > Is your system's code correct? > Did you over-optimize your system? (what have we discussed about over-indulging?) > Did you paper trade your system prior to placing capital on it? > Did you trade with a small amount of capital prior to placing the rest of your funds on it? > Do you know the system's limitations? > Did you properly drill your system? (see our blog article on why I am the system designer from hell) "YOU" CHECKLIST > Is the current drawdown you are exhibiting with your system normal? > Are you comfortable with your system's historical drawdown performance? > Are you fully aware of the risks involved with your system and the instrument(s) you are trading? > Are you trading with funds that you are comfortable risking? > Are you relying too heavily on your performance? > Have you set realistic goals? As you can see there are generally two areas that you need to explore: the mechanical aspect - your system - and the emotional aspect - you. Both can be responsible for making the way you feel the way you do. It will either be an error on the system's side with how the system was tested and/or programmed, or it can be your own psychological profile not being comfortable with the system's performance. Your Answers = Change = Your Growth What steps should we now take? Now that we have begun a corrective process where we have stopped the evil nature of our over-indulging ways to take control we should continue our "corrective nature" by invoking our findings and taking ACTION in correcting our errors. If the problem was mechanical - fix it, if the problem was emotional either go about setting up new thought patterns, or change your current system. The answers lie in whether you need to expand your knowledge in system development, or whether you need to grow emotionally as a person. Unfortunately there is no easy road, and even if there was everybody would be doing it. Hopefully this article has made you ponder over some of your behaviors during drawdown periods, be sure to keep an eye on yourself and as always take care of your body, because there's no use in making all the money in the world when you don't have the physical capacity to enjoy it. Ryan Sheehy is the author of http://www.currencysecrets.com where you will find more free articles and resources on forex trading. You can also subscribe for free to their monthly newsletter. |
Other Forex Trading Articles
7 Tips to Real Estate Agents' Success With over 2 million real estate agents according to the National Association of Realtors (NAR), becoming a successful real estate agent takes more than just a license and a knowledge of current laws and regulations.The first year drop out range estimated to be from 40% to 80% demonstrates that many real estate agents are not as successful as the ...Discovering Turnaround Candidates There are many types of investment methodology out there. All of them has their own merits. I for one, personally like to invest in turnaround stocks. What is turnaround stocks? They are normally companies that are experiencing problems (hopefully short-term), and a lot of people are not willing to wait for those companies to recover.I pe ...Currency Trading: Understanding the Basics of Currency Trading Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the basics, otherwise we will find ourselves lost where we less expec ...Trading Volume-Window to The Soul of Markets Traders often over look trading volume, they pay it lip service, but they do not grasp the effect it can have on their trading system. When I was first told this by a friend who was trying to help get out of a slump, it didn't sink in right away.I thought that the volume was interesting, but I did not see any great need to use it. It didn ...The Most Important Article on Day Trading for Beginners - Telling It as It is! The appeal of day-trading and its overwhelming popularity of late stems from its easy accessibility, and promises of easy money.Trading is a game of probabilities and at any given point in time a move may happen out of nowhere that was totally unforeseeable.There are few jobs at which it is more difficult to make a living than trad ...Trading Logic – The Key to Making Huge Profits Fast If you trade any financial market, you will be aware that the majority of investors simply don’t make money. It’s not because they lack trading ability – investors don’t make money because they don’t understand trading logic.A focus on trading logic is essential for any trader who seeks to make money. Forget, opinions and emotions, and fo ...Forex Trend Detection Long term profitable Forex trading warrants long term goals and objectives. One good idea is to have an excellent trend based trading system. Just having one will not really work out if you do not follow it in a disciplined manner. Building a trend based trading system is no mean task. The basic skill lies in solidifying the rules for trend dete ...When It Comes To Treating A Bad Breath Problem You Have Numerous Options Bad breath is a problem that can affect anyone from time to time. It’s a very unattractive problem that can lead to a decrease in social standings. In this article, we’ll examine the problem posed by halitosis, work towards understanding the problem, and offer some solutions for solving the problem.There are actually three different types ...Four Problems with Technical Analysis Being a geek, it's only natural that I'm primarily a technical trader. However, I've never been satisfied with the current state of Technical Analysis (TA) because of the lack of a widespread, rigorous scientific approach to the subject. Here are four main problems with technical analysis that I see:1. Classic chart-reading is too s ...Online Currency Trading Strategy – The Insider Secret If you have an online currency trading strategy, then you should incorporate the advice given in this article to make bigger profits - and maybe even change a losing system into a winning one.The advice we’re giving here is contrary to almost everyone else on this subject - keep in mind however that 90% of traders lose! So, let’s stay awa ...Swing Trading Systems Swing trading systems capitalize on the oscillations experienced in the stock prices. In this style of trading, the returns on a stock can be gained in few days or within a week or two. Traders employing this style can leverage on the short term stock movements without fearing any stiff competition from the big players in the market. Swing tradi ...Currency Update – 5 Trades Correct Last Week, What Does This Week Hold With our currency update last week we had some great trades and while we were right, we also know that if we were wrong, our risk was small for all trades entered.We have had some fantastic profits last week but that’s the past, let’s look at the currencies this week and what we think will happen.Our view last week was the longer t ...Day Trading Strategy It is necessary to plan business and prepare a proper strategy for achieving success at day trading. If you want to take advantage of every available market opportunity and want to maximize the potential profit – striving for quality and gaining precise information at the right moment is absolutely necessary. Remember to increase the returns and ...Trading Profitably on the Foreign Exchange Market You may be asking yourself "how does one begin to trade profitably as a currency trader?".First, it is important to closely monitor foreign equity markets to attempt to predict or model how their respective currencies will perform against other currencies, ideally, currencies that are not very closely related, nor proportional, to the for ...Tooth Whitening for That Brighter, Whiter Smile If you are looking for that brighter, whiter smile then tooth whitening can be a very effective way of lightening the color of your teeth. Tooth whitening is a highly effective way of combating stains created from smoking, eating and certain drinks such as coffee, tea and red juice.Some people naturally have whiter teeth than others but a ...The Day Forex Guide to Profitable Trading Do you want to make larger and easier profits with your online day trading? Are you looking for a day forex guide to profitable trading of stocks, bonds, mutual funds, and currency online? Here are my top 3 hints to day trading profits.Hint #1 – Balance your portfolioYou have to maintain a strong balance between long term investm ...Currency Trading – Big Profit Opportunities For The Week Ahead Please find below currency trading opportunities for next week based upon the same style of analysis we recently published to catch the big moves in energies.There look to be some great opportunities in the currencies this week, so let’s look at some of the major currencies and the best ones to focus on for Monday.Dollar getting sh ...Forex Trading Guide- How to Deal With Forex Trading Buying and selling of different currencies of the world is known as forex trading. Forex or foreign exchange market is the largest trading market in the world. Forex trading market deals with more than US$2 trillion everyday. It has become favorite option for currency traders. Foreign exchange market is extremely different from stock exchange ma ...Choosing A Forex Trading System – Part 3 OK, in our last installment I showed you how a sample of a Forex trading system with a high percentage of winning trades could still be a losing system overall.The whole point of the exercise was to get you to take a closer look at the performance results of trading systems that you are interested in pursuing. Now that you know that it i ...Choosing A Forex Trading System - Part 4 In the last part of our series we explored a few key performance measures to help us in choosing a Forex trading system.Here’s our example:Let’s take another look at our example:Trading System A PerformanceNumber of trades = 1000 % of Winning trades = 92% % of Losing trades = 8% Average Winning trade = ...Currency-Trading: Finding Your Niche Currency-trading is quite similar to trading stocks on the market. While you may or may not have any familiarity with those options, you should know that trading in this form is quite popular and it keeps gaining in popularity. There are many reasons for that but in most cases it is popular because it works and is quite straightforward which m ...Are You the 1 out of 10 Traders Trading in the Zone? A common question I am asked repeatedly is, "How much time does it take to become a successful trader?" Each time I give the same simple answer, "Do everything, which is needed to be successful that an unsuccessful person is not willing to do. You must strive to be the best you can be. You must create new ideas in order to be successful. You mus ...The Benefits of Day Trading Day trading is often debated by stock investors and brokers. Many people think it is a problem while others believe it is the best way to trade stocks. Day trading is seen by some as a great skill that is the only way to play the stock game. Day trading does offer many benefits and perhaps it is the benefits that draw so many to the idea of d ...Forex Trading Education And A Successful Trading Career Everyday more and more people decide to enter the world of Forex Trading with the high expectations of having an income source that will allow them to work from anywhere in the world they may choose to live, to maintain and even improve their current life style and get all this without being attached to a cubicle and fixed schedule traditional ...Jedi Mind Games for The Forex "Your worst opponent is yourself Young Jedi"When it comes to marketing on the forex exchange, victory is a matter of the mind instead than mind atop matter. Any dealer wh's been in the game for any extent of time shall recount you that psychology has a lot to do with both your own execution on the trading floor and with the way that the e ...Forex Software - Choosing the Best When it comes to forex trading the forex software you choose is essential. There are so many forex trading companies all competing for your business that choosing the right forex software can be quite a difficult task. Most of the forex software products available offers live online forex trading platforms but what other components are vital w ...An Introduction to Forex Trading Foreign Exchange or FOREX Trading has existed for as long as merchants ventured to new lands hundreds of years ago and traded with their counterparts.It is only since the latter part of the 20th and the beginning of the 21st century that faster and more efficient ways of trading via the Internet have evolved.Forex trading online ca ...FOREX Fundamental Analysis Most FOREX traders rely on analysis to make plan their trading strategy. This article will discuss fundamental analysis. The other common form of analysis is technical analysis. After reading this article you should have a better understanding of fundamental analysis and how to use it as part of your FOREX strategy.Political and economic ...
| 