S***! Blog over, see you next week. 😊
Losing a few trades in a row does many things to the mindset of a trader. Frustration, loss of confidence in their ability and the feeling of failure to name a few. Neglecting the financial aspect of a losing streak for the time being, lets focus on the psychological impact.
Personally, I hate losing with a passion, whether it be on the football field, playing table tennis, video games etc. I loathe someone getting the better of me. Unfortunately, being the wrong end of 30 now, it happens a bit more on the pitch.
Being a full-time trader means leaving your ego at the door, it’s not a winner’s game, it’s a numbers game. This advice is all predicated on the back of whoever is reading this, has done their back testing and forward testing and thus, knows their performance statistics like the back of their hand. If you are a trader reading this, that doesn’t have a concrete strategy or knows information such as your average drawdown or win percentage, I don’t have any sympathy for you, you deserve a losing streak because ultimately you don’t know what you’re doing (sorry, not sorry), you’re down s*** creek without a paddle, driving your car without mirrors, you’re going to crash at some point.
The markets not out to get you, it doesn’t care about your $100/$500/$1000/$2000 or $20,000 account, why would it? You think the institutions are specifically targeting Daniel Smith who went long on EURCAD on a $500 position? The FOREX market has a daily trading volume value of $6.6 TRILLION, don’t kid yourself, you’ve just lost a few trades. Remember, the market is never wrong.
There are various tactics that can help you manage your losing streaks better:
- If you have a track record, look back on it, the likelihood is you have gone through the same thing before and have come out the month with a green percentage.
- Keep in mind, if you are risking 1% of your equity, is it really that bad losing 4-5% of your capital? Ultimately, if you can’t handle that, then I’m sorry to say, you can’t handle trading.
- Reduce your risk, if you feel disconnected from the markets (which every trader does at regular intervals) level down to 0.5% risk until your confidence comes back. This will reduce your losses and let you recuperate quicker.
- Ask yourself is the money really worth all the stress this streak is putting you through, if you’re trading because you NEED the money right this minute, this is a problem and will cause you harmful stress.
- Remember, any decisions you make, that is not part of trading plan, may cost you weeks, months or even years of hard work to get back. Don’t let one day ruin everything you’ve done up to this point, the great week is just around the corner and you’ll earn far more than you lose on a bad run.
Don’t get me wrong, I say all this because I’ve lived it, I lost $20,000 in about 20 minutes once, and that’s not an exaggeration. I was devasted the next day at the stupidity I had, I went on a losing run and lost my head, revenge traded and lost about 4 months of profit in 20 minutes, trust me, I know it’s difficult when that losing run comes and rears its dirty head. Everything I write, I speak from experience in the markets, it’s not just you, millions of traders are in the same boat, individuals who aren’t traders have no idea the psychological impact that trading has, that’s why the RT.FX community is great, chat to members, share your issues, no one is here to judge, lets help everyone get through their difficulties and progress as traders, we are all in this together. As a follow-on note from my ($20,000) day, we had to cancel my girlfriend’s luxurious birthday holiday to Santorini, needless to say I wasn’t very popular!
Final Thought – A losing streak doesn’t mean you’re a bad trader, it doesn’t mean you’re a failure, it just means you’re going through the same thing every trader goes through most months! If you’re scared of flying (like I am), turbulence is the worst thing in the world, however, as every pilot and fear of flying book says, turbulence is not harmful to the plane, a losing streak is not harmful to the trader UNLESS you make it harmful by losing your discipline.
Good Luck and Trade Safe!
Ryan
Very nice article .
Cheers pal