Forex trading comes with gains and losses, but coming out of the losses is also very important. Don’t let the losses ruin or end your Forex trading career. Never give up on trading Forex! I have assembled five powerful lessons learned from Forex trading losses.
AtoZForex – Winning and losing are parts of Forex trading. Every trader goes through trading loss and it does not stop them. Obviously, a big loss can undoubtedly give you a big blow. I know a big loss causes all sorts of inner conflict. To name some need for revenge, anger, frustration, fear, self-hate, market-hate, etc. More or less every trader has passed through this phase in their Forex trading career at least once.
Every trader has bad days, but according to me, every failure is the stepping stone to success. Make a rule to never let a bad day cost you more than what you make on an average profitable day. You cannot trade with a clear head following a big trading loss. Based on my research, here are 5 powerful lessons learned from Forex trading losses that will help you to recover.
#1 Learn to accept the responsibility – Don’t play a blaming game
From the 5 Forex Trading Comeback tips, first of all, we will discuss accepting the responsibility for the losses. Every trading loss has an excuse. Some are really good, but we should learn to accept all the responsibility for our loss. We should not blame the conditions or the market. The market can never be at fault for your loss. Playing a blaming game is not going to help at all. It is merely a waste of time.
As per the study, if you keep on thinking about the loss, you are not going to move on. Therefore, it is necessary that you accept responsibility for the loss and avoid being in a lengthy and fruitless process of the blame. Trading is your choice and decision, so learn to accept that you are only responsible for your loss. Rather than wasting time thinking and blaming others for the loss, it is better to invest your time on analyzing what made your loss.
#2 Analyze your losses and mistakes
Take off your hands from your computer. Get up and walk a bit around. Think and do a little self-analyzing. Now, go back and review your trades. Did you trade according to the rules and your trading plan? Did you go another way around with any of the trading rules? Did you go off the track set as per your trading plan? Such questions will help you to find and analyze where you made a mistake that led you the loss.
Rule number two of the powerful lessons learned from Forex trading losses, deals with analyzing your mistakes. Most successful traders learn to analyze their pitfalls and try to not repeat them for future transactions. What I believe is that the first error is a mistake, but to repeat the same error is foolishness. So always sit down for a while after your loss and analyze your mistake. Analyzing will help you to rectify your mistake for future trading and will even lessen your fund loss. Managing your losses is also very important in Forex trading.
#3 Correct your Forex trading plan
After analyzing comes correcting or rectifying your trading plan. If you analyze and don’t rectify, there is no use of analyzing. One of the greatest sign of a successful trader is not to repeat the same mistake. According to my opinion, it is easy to learn from your own mistake, but a great learner is the one who learns from others’ mistakes. Remember not to make any drastic changes in your plan. You just need to correct in the areas which were unusual and not as per your set trading plan. Rather than thinking about the loss, it is better to correct as early as possible and move on. Try not to keep lingering on with the fear of losing and prepare yourself with gaining some confidence. It is you only who have also made profits.
#4 Boost up your confidence
I can understand that after a big loss, the confidence can be extremely low. The mental damage done is irreparable especially the confidence. Moreover, even the mind is not clear to take on a new trade. This can cause to skip trades, create fear of losing, become extra careful, and aggressive to get back to our old winning ways.
Hence, according to me rule, number 4 from the lessons learned from Forex trading losses is quite crucial. The impact of a big loss can again lead you again to another loss due to lack of confidence. So, I would suggest stepping back and trading in a demo account for a few days. If you will be losing, then you will not be losing your real money. Trading in a demo account has less pressure, so you can focus on trading without any worry about the financial aspects. Therefore, this will help you to boost your confidence and to return to your old profit-making ways. Bear in mind that overconfidence is also not good. Successful traders are quite confident about their trades and they understand that they are not trading in fear because fear is also not good.
#5 Return to trading (start small)
From the 5 Forex Trading Comeback tips, last but not the least is how to return to trading again following a massive loss. For most traders the fear of losing swirls around after suffering a big loss that they may lose again. Therefore, I suggest starting with a demo account and a few winning days will help you to raise your confidence level. With being confident enough, you will be able to take on the markets again with better mental space with real money.
Following a big trading loss, you should start with small. You should not jump back to the same position size as you were doing previously. Start with a small position size on the first day after a loss. If you win on the first day, this will help you to boost up your confidence and the next day you can increase your position size. In case if you lose, losing on small position sizes will be easier to handle than another losing day on full position sizes.
Are these 5 lessons learned from Forex trading losses helpful? Let us know in the comments section below. Moreover, I recommend you to read the other amazing Forex educational articles to keep on developing yourself.