If you are reading this article, you are most likely a trader or at least interested about forex trading. And if you are a trader, you have most likely encountered losing trades. What usually happens, especially for beginning traders, is that those losses have a negative impact on your future performance and are stopping you from being profitable long term. This material will try to help you understand why that happens and how can you overcome that obstacle.
The wrong mindset
If you are a beginning forex trader, you most likely had come to this industry with the wrong mindset. You are expecting to make money, day and day out, week and week out, without mistake and without encountering losses. That simply can’t be done. As we mentioned in one of our previous articles, Mindset and Forex Trading, you need to reshape your thinking in order to be an effective forex trader.
Now that we’ve spotted the root of the problem, we must talk about the solution as well.
The way out of this problem is to look at any particular trade independently. Just because you lost money on your last trade that does not mean it will happen again for each trade in the future. Treat every situation as a new beginning, or as a fresh start.
Getting comfortable with losses
You need to get used to encounter losing trades. If you already lost some money, just stop a second and think. That killed you? No, nothing dramatic happened to you. So exaggerating too much after a loss and not treating it more loosely, is not the right way to do it.
Instead, take a step by step approach and understand the compounding effect some little efforts can have on the long term (this is a strategy also known as the Aggregation of marginal gains, which will be discussed in greater detail in one of our future articles).
In conclusion, fear is something that you will experience, in trading and not just when it comes to it. You need to evolve as a person and learn how to conquer it, so it won’t stop you from reaching your goals.