No matter what point you’re at in your forex career, you’re sure to know by now that it’s virtually impossible to expect win after win after win. It’s only natural that sometimes losses will occur and, when these losses begin to build, it can be tough to pull yourself out of the negative mindset that may accompany this losing streak.
That’s why, today, we’re continuing on our mission to teach you how to trade forex the right way, offering up 4 steps vital to recovering from a series of losses without abandoning your forex trading strategies and potentially risking further capital as a result.
Remove yourself from the market (for however long you need)
If you’ve found yourself experiencing recurring losses with your trades, the signs are all pointing towards one thing: there’s something wrong with your strategy. As such, rather than adopting the age-old mantra of ‘if you don’t succeed, try and try again’, instead remove yourself from the market and take it back to basics.
Whether this involves studying your trading journal to identify patterns and recurring mistakes or returning to a demo account to experiment with different strategies, look to identify what’s working and what’s not. From here, take the necessary steps to fix your issues, first testing out any strategy or pairing revisions in a demo market before finally returning to a live market environment. Remember, patience is a virtue, and rushing back to a live market before you’re ready is sure to do more harm than good!
Take your emotions out of the equation
One of the fundamental elements of understanding forex trading is a comprehension of the psychological elements associated with being a trader. In such a high-pressure environment, forex trading can quickly become mentally draining without the right know-how and precautions, especially when you’ve regularly been losing your hard-earned capital.
The danger here is that your emotions become intertwined with your trades, with anger and even desperation spurring on ill-informed trades based on desire rather than analysis. As any forex trader will tell you, this is cardinal sin number one – so if you catch yourself in the act of emotive trading, take your emotions out of the equation and, returning to point #1, remove yourself from the market. Remember, never break away from your strategy without justifiable reasoning – especially if you find yourself in the process of chasing losses.
Get your head back in the game
So, with a revised strategy and your emotions back in check, it’s time to focus on the most important step to recovery: refocusing your mind. It’s likely your confidence has taken a knock during your losing streak, but wallowing in losses isn’t going to help your future trades become profitable. Instead, focus on familiarising yourself with the market fundamentals to return to a position of mental clarity.
On top of this, refocus on the bigger picture by familiarising yourself with the reasons why you got involved in forex trading in the first place. Whether it’s a financial goal or a desire to evolve your personal skill set, by re-establishing your personal goal, you’ll find your motivation quickly returns – something that will greatly assist in rebuilding your confidence on your way to recovery.
By following these 3 simple steps, you’ll find yourself back on the road to trading success in no time at all. Remember: the key is putting in the time and effort to discover the right forex recipe for you, and not being afraid to accept and adapt when the losses come around.