The moment arrives in the life of almost every forex trader when he or she realizes that their actions are not cutting it. They are just not doing what they need to. Normally, this coincides with a period when they are frustrated and/or angry. Upset with the market, but mainly angry at themselves for not performing like they expected. Almost always, this comes after a big loss, when a trader has likely violated intelligent money and risk management principles.
Of course, there could be other reasons… and more underlying ones at that… but the nature of trading makes it likely there are is a confluence of events or technical reasons why a trader has done what they do…and then continued to do it. These kind of periods can lead to long cold streaks for traders, where they just cannot get any traction, and losses seem to pile up continuously. Unless the trader has an epiphany, or loses all their money, they are likely to continue losing and may chuck the whole business of trading altogether. The irony is that many very good traders with huge potential, do this all the time. Here are few suggestions to keep traders alive and kicking. Consider them a “wake up” call:
De Nile isn’t just a river in Egypt. Denial that is.
It’s what separates men from the boys, the women from the girls…and everyone from the girly men. A trader whom does not take 100% responsibility for his or her actions, will never be successful, regardless of how technically good or bad a trader they are. Most people find it very hard to admit mistakes, but for traders it’s the most crucial aspect of trading. Emotions are trade killers. They often kill traders too. The trader whom “marries” their trades are more likely to be emotional traders whom have pushed reason aside to stake a position. They are also most likely to fail, and then have a harder time getting up again because they stubbornly refuse to admit or learn from their mistakes. The trader who is quick to admit they are wrong often has the opportunity to reverse his decision, close trades , and then go in the opposite direction. However, this requires someone whose ego is sturdy, not dependent on the quick flashes of fast money, but more in sync with the longer term goal of making money.
Slap in the face.
It can either be insulting or refreshing, depending on the perspective and psychology of the trader. Indeed, the mind set of the trader is the whole core of trading. Everything else can be learned or taught, but the way a trader thinks or emotes, is harder to tackle. The day the trader screws up and screws up big, is the day the trader has to face the reasons for this circumstance. The key is how quickly the trader faces reality. Sometimes, a mistake or string of mistakes can be innocent…going long when the trader really intended to go short. At other times, it can be a habit of doing that or something else which indicates that the trader has a fear of success or something even deeper which prevents the trader from achieving goals. The trader can either restart with fresh determination and resolve, or quit in despair.
Humiliation.
On a big loss, most traders will slink away from their screens after they have vented considerable anger, only to withdraw into themselves. Often, the fear is that they’ve not only let themselves down, but their loved ones, and maybe their peers too. This can be particularly acute if they had been profitable before the loss, and shared their success with others, and even more so if they were providing instructions to other less experienced traders. Traders whom learn to be self critical without overdoing the critique so that it affects their confidence to trade in the future, will likely be successful at the end of the day…or year. Traders therefore, need to develop a skin as thick as a rhinoceros so that losses roll off their backs like water off a duck’s ass. When you have doubts about your abilities to trade or succeed, you simply cannot win…and you are more likely to attribute any winnings to luck. That’s not good for traders. Actually, it’s one of the worse things.
Cold water on profits.
Most trading slumps or losses can be traced to small things. Could be having too many trades open, or not waiting for setups to emerge as the trader had planned. Often times, it’s something even smaller, like cutting profits too quickly. Whatever the reason, traders need to find a way to deter themselves from sabotaging their trading. This can include trading with others as part of a group, closing the trading terminal while a trade is open, not changing or moving stop losses or take profit targets once they have been entered, and maybe stop trading during certain sessions. In effect, walking away from opportunities. Opportunities to win, but also to lose.
Straying off course.
Strategy, strategy, strategy, but more importantly, implementation. Another aspect of getting back on track, and staying there, is analysis. This means more “homework” for the trader and additional study of charts, indicators and methods. It also means diving deeper into what makes them tick, and perhaps consulting with others to find out exactly what may be causing a trader’s losses. Sometimes, the reasons are totally unrelated to trading and involve personal feelings or actions, and even connections to events and feelings from the past. Like athletes, traders need to learn to wipe clean the negative, while taking the positive and harnessing it. It might even be worthwhile for traders to talk with hypnotists to develop their “inner selves.”
Crisis is opportunity.
OK, we’ve all heard this one and we like to think that every crisis can be a lesson that helps us become better at what we do, but sometimes it can destroy us too. Think of all the traders whom have started forex trading, but are now sidelined. Chances are, they got that way from losing money or blowing their accounts, and the lesson they took away, was that the game was not for them. Maybe it wasn’t. For just as many, it’s a real shame. They likely have what it takes, but they did not realize the difficulty. Taking time off is one thing. Quitting is another. We all know that trading is hard. Damn hard. However, the lure of big money after a “eureka” moment, is too good to ever stop. Just wake up, smell the roses, drink the coffee, and get back to work.
