Let’s take a look at your trading self-esteem.
Have you ever found yourself on the wrong end of a series of losing trades? Have you thought about or journal how you felt as you were ready to execute that next trade? Next time this occurs, write down those negative thoughts in your forex trade journal. Currency trading (and any trading for that matter) is 90% mental and we should explore and embrace this side along with our pips and moving averages.
When we have a string of losing trades our trading self-esteem tends to take a real hit. The successful forex traders learn from their mistakes and move on.
Just look at a Hall of Fame baseball player. Most of the hitters in the baseball Hall of Fame are described as having a slightly greater than .300 batting average. That means that they are successful in getting a base hit 3 out of 10 times.
THAT’S A 30% SUCCESS RATE!!!
They failed to get on base 7 out of 10 times! Yet, they are considered the best in their profession.
Forex trading is similar to baseball. Even though the Hall of Fame baseball player fails 70% of the time, the player has a belief that success is waiting for them at ever at bat.
They study the pitchers and evaluate every situation when they are at bat to maximize the probability for success.
When they succeed, they celebrate!
We as forex traders must learn to carry this same approach to our trading. We cannot treat our trading experiences like a sign hanging in the window of a restaurant saying “Free Food Tomorrow.”
When we come back the next day for our free meal the same sign is hanging in the window. Well, we will never receive that free meal. You will never feel satisfied.
You must learn self-satisfaction. You must become your own cheerleader. You must learn to celebrate your success, even if it is a losing trade! Take the positive aspects and expand them, because what we focus on expands!
Just like the baseball player we study the forex market, evaluate the trade and execute the trade with a belief of a successful outcome every time. Do we always succeed? No! But we know we can also be successful and profitable losing a high percentage of the time.
Trade and money management rules allow us to prosper.
The other day I was patently waiting for a trade set up with the USD/CAD. I waiting and the trade triggered. I had it planned and entered on the correct candle pattern, with the correct lot size and the correct stops.
Just before my plan said to tighten my stops the pair reversed and stopped me out at my predetermined exit.
I was happy! Why?
There is a big difference between a bad trade and a losing trade. I did everything correct according to my plan and the trade did not go my way.
I celebrated by giving myself a high five and began looking for the next trade. The law of averages will eventually work in my favor just like the baseball player.
Just like my freshman year in college when I was competing for a spot on the baseball team. I was really practicing well and had an assistant coach in my corner.
He convinced the manager to give me a chance in the next game. I got my chance and went 0 for 4 at the plate. I had a 0% success rate, but that did not tell the whole story. I hit 4 solid line drives that the other team caught for outs.
The next game I went 4 for 5 with 4 RBI’s because I had the belief that I was doing everything correct.
For those of you who are struggling to manage your losses try this.
Conduct a review of your trading journal and write on a 3X5 index card all those mistakes you have made in the past that you feel are creeping into your current trading decisions. Have this card next to you when evaluating your next trade.
I bet you that those mistakes and negative thoughts that are holding you back today will soon vanish and you will be trading in the correct frame of mind.
Embrace your mistakes and don’t beat yourself up! No more “I am not good enough to make money in forex” thinking.
Anything fully experienced will soon vanish!
Check out FX Trade Central for more exploration of trading psychology.
Happy Trading!
