If you’re a trader, you understand that you’re bound to lose once in a while in the forex market. Whether it’s a normal or a huge losing streak, understanding how to recover from the loss is critical. Here are tips to help you bounce back after a losing streak in the forex trading market.
Identify the Type of Losses
To recover from a losing streak, you should strive to understand the type of losses available in the market. There are two types of losses you may incur during your cfd trading journey. They are an emotional and a normal loss. When you incur losses, try to identify whether they are normal or emotional.
Normal Losses
A normal loss is a loss that forms a part of your trading strategy. What this means is: in any trading strategy, a specific percentage of executed trades will result in losses. It doesn’t matter how disciplined or consistent you are because losing in CFD trading is inevitable. What’s more, there’s never a strategy that will win all through both for novice and experienced traders. It’s worth noting that losses are bound to happen and traders should be prepared for the same.
Emotional Losses
Emotional losses occur when traders become extremely emotional. This could be a loss resulting from over-trading triggered by greed, revenge, or anger after a huge unexpected loss. Emotional losses are risky and can result in massive losing streaks which in severe cases will leave your account dry.
To avoid these losses, traders must hold serious conversations with themselves and try to establish the cause of their losses.
Your Trading Strategy won’t Start Bearing Fruits Immediately
If you’re planning to trade in the long term, losing shouldn’t raise the alarm in the early stages. As a trader, it’s difficult to tell when losses will occur. For instance, assume you executed 100 trades within a year. Think of those 100 trades as a mixture of two colored marbles in a jar. In this case, let’s say the jar has yellow and green marbles which we mix randomly. Now dip your hand while blindfolded and pick one marble out.
Would you know which color you’d pick? Of course, you’ll have to look to know. Now assume the yellow marbles have won, beating the green marbles, in this case, the losing trades. If your trading strategy wins by 70%, that’s an indication that 30% of the remaining marbles will be green. While within the 100 marbles in this case trades, you can be sure of picking out 3 losing trades. When it comes to a single trade, however, you can’t be certain which marble you’ll pick out.
Eliminate Negative Emotions from Your Trading
Emotional cfd trading won’t help you stop any losses. Losing can be painful and a trader is allowed to feel emotional. However, you need to accept the losing streaks and establish better strategies for preventing them. Knowing that losing happens to both beginners and experienced traders may help you cope with the loss.
Maintain a focused mind and set your eyes upon the bigger picture which in this case is the long term results you stand to experience in the future. Remember, your success and ability to make profits is outlined within an entire year. Sometimes, this duration could be longer.
Take a Break from the Market
If you realize that your losing streaks have been too much, consider taking a break from cfd trading. During your break, deliberate on your trading journey, and figure out whether you still want to continue doing it. Conduct extensive research and try to learn from seasoned traders. Practice on a demo account and when you come back, you’re guaranteed to have sufficient experience.
Finally
Understanding how to deal with losses is the first step towards becoming a well-versed trade. The good news is that you can always recover from the loss, bounce back, and still become an experienced trader.
