Losses are an unavoidable aspect of the journey for a forex trader. Even the most successful traders have lost money occasionally. The issue, however, is not the losses per se, but rather how you handle them. It may be time to learn how to stop caring about losses if you notice that they cause you to become overly stressed and emotional. Here are some pointers to assist you in doing that…
Recognize that losing is an inherent part of the game.
Losses are inevitable in the high-risk activity of forex trading. Even the most successful traders occasionally lose money. Once you realize this, you’ll be able to see losses as simply another stage of the process. Another way to think about it is that losses are just a cost of doing business in the trading industry. You need to take risks to make money in any business.
Think about how you performed overall.
Consider your overall performance instead of just individual trades. Establish long-term objectives for yourself and track your development over time. When you do this, you are able to see the bigger picture and understand that your overall performance is more than just your wins and losses. Just because you’ve taken 4, 5, or even 6 losses in a row, doesn’t mean that you’re not on track.
If you’re following your plan and executing on trade setups that fit within the plan, it’s possible to hit a string of losses. If you zoom out and look at your equity curve you may see you’re actually doing better than you thought. Keep your eyes on the big picture!
Don’t risk more than you can afford to lose.
Traders who risk more than they can afford to lose tend to struggle with dealing with losses on an emotional level. Make sure your risk tolerance is clear before you begin trading and only risk money that you can afford to lose. As long as you ensure you risk a small enough amount to ensure a low risk of ruin, any losses you do incur won’t be as severe, and you’ll be able to handle bigger losing streaks.
Develop and stick to a trading plan.
Any trader should have a well-developed trading plan. It provides you with a clear set of guidelines to follow to keep you disciplined and focused on taking the right trade setups. This way you’ll be less likely to make emotional decisions if you hit a losing streak. Having a clear trading plan is a very critical part of any professional trader’s toolkit.
Keep a trading journal.
A forex trading journal is a great tool for tracking your development and learning from errors. Write down what happened and what you could have done differently after taking losses. You’ll be able to learn from your errors and gradually improve your trading if you do this. It doesn’t just stop at journaling the technical side of things, you should also be journaling your emotions and how you’re handling wins and losses.
Practice mindful meditation.
Practicing mindful meditation involves paying attention to the present and objectively observing your thoughts and feelings. By engaging in meditation exercises, you’ll be able to better control your emotions and maintain attention while trading your strategy. This can help you with accepting losses better so you don’t revenge trade.
If you need a break, take one!
Take a break if you’re feeling overburdened by your losses. Take a break from your computer and engage in a relaxing activity, such as going for a walk or spending time with friends and family. You’ll feel better rested and be better able to concentrate on your trading strategy when you return to trading.
In conclusion, even though losses are a part of forex trading, your emotions don’t have to be in charge of them. You can learn to stop caring about losses and concentrate on your long-term trading success by using these suggestions and developing good trading habits.
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Robert Castillo – Currency & Commodities Trader,
Financial Analyst, Writer & Editor.
Robert is a funded trader based out of Toronto, Canada, and has been trading currencies, commodities, stocks, and cryptocurrencies for over 7 years. Outside of trading he enjoys producing music, mixed martial arts, and riding his motorcycle in the summer.
