In forex trading, it’s impossible to win all the time.
The reality is, the odds are more in favour of you losing money, rather than winning. It’s for this reason that money management, and the way you cope with a losing streak is critical to success.
All too often, after a series of losses, rookie traders become obsessed with the desire to make up for the loss. Then, in their attempt to recover the loss as fast as possible, inflict even more damage to their PnL.
Hands down, the biggest problem with a losing streak is that it can seriously shake a trader’s confidence levels. And, it’s during these times that you’re vulnerable to making these ‘amateur’ mistakes.
So, what are the typical symptoms? 9 times out of 10, overtrading and over-leveraging. Luckily, they can be avoided by implementing these two simple techniques.
- Take a break from the screen
While this seems like a no-brainer, not many realise the your concentration and focus is at risk. Instead of thinking that a little down time is a good idea, many traders tend to stew on ‘missed opportunities’ while away from the screens.
Instead, heed these words, grasshoppers – The market will still be there next week, next month, next year… with or without you.
- Trade only the better R:R setups
Often overlooked, but when you dial back a bit and focus ONLY on the setups with higher risk-reward ratios, you’re mitigating the impact that a losing streak can have on your capital. Smaller losses and larger wins… that’s what it’s about, folks, rebuilding your forex trading account.
Bouncing back from a losing streak is no different to overcoming a challenge that comes our way throughout life. Strong money management skills key to the drastic improvement in your trading results, proving a robust method of bouncing back from a series of losses.
It takes a little more than a winning streak to heal the wounds inflicted from a losing streak, however by having a solid set of rules to follow, to ensure no emotional or tilt trading takes place, you’ll be able to rebuild confidence and maintain the forex trader’s mindset!