Almost all traders have experienced losses that cause panic or even frustration. Streak losses can occur at any time and it is unavoidable. Moreover, many traders who experienced a loss will act emotionally. According to The Balance, after a losing streak, you may begin to question yourself, which leads to all the typical problems many new traders have, like getting out of trades too quickly, holding on to them too long, skipping trades with the fear of losing, or getting into more trades than you should in an attempt to get some winning trades. Then, it can make them experience a greater loss. How should we deal with successive losses and rise again?
Let’s check out these following tips to make you deal with successive losses and rise again:
Recognizing the type of loss
The first thing you must do to rise from a loss in a row is knowing the type of loss you are experiencing. Basically, there are two types of losses that are often experienced by traders, that is normal loss and emotional loss.
Normal loss is a type of loss that statistically must occur. In this case, many traders who are consistent and disciplined in their trading also experience losses. That is because no trading system has a winning rate or a 100% profit percentage.
If after being tested (backtest) it turns out that the profit percentage is 60%, then the loss percentage is 40%. For example, after 100 trades you will likely experience 40 times the loss, it can be a one-time loss or a continuous loss, and that is a normal loss that statistically must occur.
Emotional losses are usually caused by over-trading due to greed and euphoria after large profits or a sense of ‘revenge’ after successive losses. It will make us overconfident. Thus, the large losses can make us emotional and entry many times to make up for the losses we have experienced.
Emotional factors often greatly affect the way of trading. It is relatively difficult to control, especially for novice traders. Therefore, we must make a trading plan based on a system that has been tested and implemented correctly and patiently without emotional involvement. Thus we can avoid over-trading habits and interventions position.
Knowing that trading takes time
You have to know that trading takes a lot of time. You cannot get success in one night. It is possible that you have lost a number of times in a row. However, it does not mean that you have to be frustrated.
Stick to the trading system and discipline in carrying out the plans that have been made. Then, you will see the results along with the increasing number of trades you make.
Knowing that negative emotions will not help you make a profit
Forex trading does not only promise unlimited profits, but also unimaginable losses. This is the reason why many traders can quickly get trapped and overcome by their emotions. In any case, reactions that are only based on negative emotions will tend to be dangerous, especially in trading. Emotions cannot be eliminated, but they can be controlled.
You have to remember that your success in trading is measured over a long period of time. It can be several months or even years.
Read more: Day Trading Rules That You Must Know!!! (1)
