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Lesson 4: Handling Losing Streaks – Embrace DisciplineWelcome to Lesson 4 of the Hercules Trading Psychology Course—Handling Losing Streaks: Embrace Discipline for Long-Term Success. Building on the essential traits of Initiative and Discipline covered in previous lessons, today we address a critical aspect of trading psychology: how to handle losing streaks. Whether you’re involved in forex, stocks, commodities, or cryptocurrencies, understanding and managing losing streaks with discipline is vital for achieving sustained profitability across all financial markets. Understanding Losing Streaks Losing streaks, defined as three or more consecutive losing trades, are an inevitable part of trading. They can significantly impact your trading account, erode your confidence, and disrupt your overall performance. However, it’s important to recognize that losing streaks are not a reflection of your trading abilities but rather a natural occurrence within the volatile environment of financial markets. Why Changing Your Approach During Losing Streaks Is a Mistake When faced with a losing streak, the temptation to alter your trading approach can be overwhelming. You might consider tweaking your strategy, increasing your trade sizes, or abandoning your trading plan altogether in an effort to recover losses quickly. However, these impulsive reactions often lead to more significant losses and hinder your long-term trading success. At Hercules Trading, we advocate for steadfastness. If your trading system has been thoroughly tested and proven effective over time, the best course of action during a losing streak is not to change anything. Instead, maintain strict adherence to your established plan and trust in the process you have developed. The Power of Discipline Discipline in trading means sticking to your trading plan and executing your strategies consistently, regardless of market conditions or emotional states. Here’s how discipline can help you navigate losing streaks: 1. Maintain Consistency Consistency is the cornerstone of successful trading. By following your trading plan meticulously, you minimize the influence of emotions and reduce the likelihood of making impulsive decisions. For Swing Traders: Stick to your long-term strategies. Resist the temptation to alter your plan based on daily market noise. For instance, if your plan dictates holding a position for two weeks, avoid the urge to exit prematurely due to minor market movements. For Day Traders: Follow your short-term strategies diligently. Adhere to your predefined entry and exit points, even when the market is volatile. This consistency helps in minimizing impulsive trades driven by emotional reactions. 2. Implement Robust Risk Management Effective risk management is integral to discipline. It involves setting stop-loss orders, limiting the size of your trades, and ensuring that no single trade can significantly impact your overall portfolio. For Swing Traders: Diversify your investments across different financial instruments to mitigate risks. Implement strategies that protect your capital over the long term. For Day Traders: Use strict risk management techniques to handle the high-frequency nature of day trading. Limit your exposure per trade and use tools like trailing stops to protect your profits. 3. Control Your Emotions Maintaining emotional equilibrium is essential for making rational trading decisions. Emotions like fear and greed can cloud your judgment and lead to poor trading choices. For Swing Traders: Develop patience and resilience to withstand market volatility. Avoid making decisions based on temporary market sentiments. For Day Traders: Stay calm during fast-paced trading sessions. Use techniques like deep breathing or short breaks to manage stress and maintain focus. Strategies to Handle Losing Streaks with Discipline 1. Stick to Your Trading Plan Your trading plan is your roadmap. It outlines your strategies, risk management techniques, and criteria for entering and exiting trades. During a losing streak, it’s crucial to adhere strictly to your plan without making any deviations based on emotions or short-term market fluctuations. For Swing Traders: Trust in your long-term analysis and remain patient, allowing your trades to develop as per your plan. For Day Traders: Adhere strictly to your trading rules, ensuring that each trade is executed based on your predefined criteria. 2. Avoid Overcompensating Attempting to recover losses by increasing your trade sizes or making drastic changes to your strategy can lead to a downward spiral. Instead, focus on maintaining a balanced and disciplined approach. For Swing Traders: Maintain your long-term strategies even after experiencing losses. Overcompensating by increasing trade sizes or altering strategies can lead to further losses. For Day Traders: Follow your predefined trading rules without exception. Overcompensating by making larger trades to recover losses can result in significant account depletion. 3. Practice Mindfulness and Emotional Control Techniques such as meditation or journaling can help you stay grounded and manage your emotions effectively. Maintaining emotional balance is crucial for making rational trading decisions. For Swing Traders: Incorporate mindfulness practices into your daily routine to maintain a calm and focused mindset, essential for long-term trading success. For Day Traders: Use short meditation sessions or deep breathing exercises during breaks to manage stress and maintain clarity during intense trading periods. 4. Keep a Trading Journal Documenting each trade provides valuable insights and emphasizes the need for a solid system over mere gut instincts. For Swing Traders: Maintain a trading journal that records the rationale behind each long-term trade, the market conditions at the time, and the outcomes. This helps in identifying patterns and improving your strategies over time. For Day Traders: Keep detailed records of each intraday trade, including entry and exit points, the emotions you felt, and the results. Analyzing these records can help in refining your trading tactics and emotional control. 5. Seek Support and Engage with the Community Engage with a community of traders or seek mentorship from experienced professionals. Sharing experiences and gaining insights can provide encouragement and reduce feelings of isolation. For Swing Traders: Join long-term investment forums or groups where you can discuss strategies and share experiences with like-minded traders. For Day Traders: Participate in day trading communities or mentorship programs that offer real-time support and feedback on your trading practices. Why Changing Your Approach During Losing Streaks Is Counterproductive Losing streaks are a part of the trading journey, and altering your approach every time you face a few losses can lead to inconsistency and undermine your trading system. A well-tested trading system is designed to navigate market fluctuations, and sticking to it during losing streaks reinforces the discipline required for long-term success. For Swing Traders: Allow your trades the necessary time to develop without interference. Overanalyzing or frequently adjusting your positions can lead to unnecessary losses and disrupt your long-term strategy. For Day Traders: Implement strict entry and exit times. This prevents you from getting caught up in the heat of the moment and helps maintain a disciplined trading routine. Embrace the Long-Term Perspective Success in trading is not about avoiding losses but about managing them with discipline and maintaining a long-term perspective. By adhering to your trading plan and maintaining emotional control, you position yourself to capitalize on profitable opportunities when they arise, ultimately leading to sustained profitability across all financial markets. Action Steps: Assess Your Current Discipline: Reflect on how you handle losing streaks. Identify areas where you might be deviating from your trading plan and commit to maintaining discipline. Reinforce Your Trading Plan: Ensure your trading plan is comprehensive and includes strategies for managing losing streaks. Regularly review and update your plan as needed. Implement Robust Risk Management: Protect your capital by setting appropriate stop-loss orders, limiting trade sizes, and diversifying your portfolio across different financial instruments. Maintain a Trading Journal: Document every trade to gain insights into your trading behavior and identify patterns that need improvement. Practice Emotional Control Techniques: Incorporate mindfulness practices, meditation, or journaling into your daily routine to manage stress and maintain emotional equilibrium. Engage with the Trading Community: Join forums, attend webinars, or participate in trading groups to share experiences and gain support from fellow disciplined traders. Trust in Your System: Have confidence in your trading system. Understand that losing streaks are a part of the trading process and that sticking to your plan will yield long-term success. Conclusion: Embrace Discipline to Overcome Losing Streaks Discipline is more than just following a set of rules—it’s about cultivating a mindset that prioritizes consistency, reliability, and resilience. By embracing discipline, you empower yourself to navigate the complexities of all financial markets with confidence and determination. In Lesson 4, we’ve explored the significance of handling losing streaks with discipline, the pitfalls of altering your approach during downturns, and strategies to maintain consistency and emotional control. These elements are essential for building a strong foundation and achieving consistent profitability across all financial markets, whether you’re a swing trader or a day trader. Next Lesson: Patience – The Key to Long-Term Trading Success Stay tuned for Lesson 5, where we’ll delve into Patience, another crucial trait that underpins consistent success in trading. Learn how to cultivate patience to make informed decisions, wait for optimal trading opportunities, and maintain a calm and focused mindset, regardless of market conditions. Hercules Trading Psychology Course is designed to equip you with the mental tools necessary to thrive in all financial markets. By mastering traits like Initiative, Discipline, and Patience, you’ll build a resilient mindset that can withstand the challenges of trading and lead you to sustained profitability. Here’s to your growth and success as a trader across all financial markets!
Education
by exlux
Bitcoin - The Marco MazeHistory doesn't necessarily have to repeat! I see a lot of history based derivation for the timelines and price as to when and how high or low bitcoin can sore. As exciting and adrenaline pumping as these ideas seem, the outcome will just be as good as any coin toss! The truth however is the "macro maze" above. I've taken sensible assumptions to derive on the timelines and humanly possibe price floors and ceilings! In this environment sensible assumptions can easily turn out to be the most major blunder, so as I always say, please do your own analysis! How to read the chart? It's quite simple, red is resistance or sell, green is support or buy. The intersections are where Bitcoin's price would likely be attracted to. There is no saying with precision when and where it would be. Kinda of like the Schrödinger's cat, you will only know when it happens. Anyone who says otherwise has a 50/50 chance of being right. Now, are you a trader or a gambler? Stay safe, peace out! Disclaimer: These are not trading signals. Trade at your own risk!
KRAKEN:BTCUSD
by TulpenFieber
How to go through a LOSING STREAK better? 🍏1. Everything starts with preparation and true expectations. Losing streaks will happen from time to time, accept it if you want to be a good trader. Even the best traders on the planet have them. But it’s the reaction to them that separates good and bad traders. Know your probability of losing streak, based on your own backtesting and accept them before they even happen. Keep longterm focus! 🍋2. Make sure you’re practicing process based trading, not outcome based. Before every trade, ask yourself if anyone in the whole worlds can say the outcome of any individual trade? The answer is obvious - no one can do it. So is it rational to build expectation of a specific market moves in this individual trade, or nearest several trades - that they are completely uncertain and you are working with random distribution of your edge. 🥥3. Once in a streak, remind yourself about your testing. See that over the past 200 or more trades, you were profitable, at least RR wise. These 5-6 losing trades you’re having now are just a very small part of a huge data collection you did before, and they are part of random distribution. 🍈4. In a losing streak, there’s usually an urge to trade more to earn the lost $ amount back. It’s a mistake, as overtrading will lead to only one outcome - even more loss in short or longterm perspective. 🍎5. In the past, I wanted to reach some state of unbreakable consistency, "once and for all", and when I thought I did it, I started to expect things to be easy from now on and not to struggle or put effort, cause now I'm fully consistent. And that was exact moment when everything fell apart. The truth is, at least for me and for now, is that I need to make good decisions - mentally and technically - EVERY DAY and EVERY MOMENT, to actually prove I'm consistent. And consistency is dynamic, I'll continue to work on it, it's like gardening, when you need to put some effort everyday and it's never fixed or done, at least for me.
OANDA:XAUUSDEducation
by Yelli_trades
3
Learn How To Trade Tradingview's new BBTrend Indicator! Introduction In this analysis I want to take a closer look at Tradingview's newly released BBTrend indicator. It's an indicator on the widely popular Bollinger Bands. You can find more information about the indicator here: www.tradingview.com Indicators are nice to use, but the most important question remains whether they are useful in trading or not? I want to present you a very simple, but powerful trading strategy using this new indicator. Indicators used - BBTrend: determine the best reversal entries. - 200-period EMA: assess whether we're trading bullish or bearish. Strategy Bullish: price should be above 5% of the 200-period EMA. Light-red BBTrend has to change in trend and become dark red. Bearish: price should be below 5% of the 200-period EMA. Light-green BBTrend has to change in trend and become dark green. Investment: risk 5% per stop loss. This means that you lose 5% of your balance if the stop is hit, but gain 15% once the profit target is hit. Stop and profit targets Stop-loss: place stop just above the most recent swing-high. Take profit: 3x the stop-loss distance. Results Win-rate: 4/8, 50% Profit: +42% (1.15*1.15*0.95*0.95*0.95*1.15*1.15*0.95) I'm aware of trading within existing trades, but for the sake of simplicity I use this easy profit calculation method. Final remarks This strategy works well in strongly trending markets due to the higher probability of the trend continuing the current direction. In periods of prolonged trading around the 200-period EMA it can get tricky to get a good trade in, hence we only trade once we're at least at 5% distance of the EMA. This trend-following strategy can be used on every asset and on every time frame. Just make sure to be consistent. Good luck!
INDEX:BTCUSD
by FieryTrading
📈DYDX: Is it finally breaking out?🔥🔔🔍DYDX is finally breaking out of its consolidation range after 672 days. The price is currently trading above the supply zone and is supported by a well-defined curve. This could be the start of a parabolic move. ✅The fixed range volume profile indicator shows that we have broken out of the high-volume zone and are ready to start moving. The SMA25 indicator is also confirming the move and is moving along with the price. 🛒The current candle is a good opportunity to buy spot. We can enter after the candle closes. The stop-loss should be placed at $2.5, which is the previous low and the POC of the fixed range volume profile. 🚀For targets, I am looking at $7.8 and then $23.7 (ATH). However, I will not place sell orders now. I will wait and see how the price reacts to these levels. 📊One positive thing about this coin is that the volume has increased significantly during the recent move. This shows that traders are paying more attention to this coin. 💥The RSI oscillator is also entering the overbought zone. This increases the chances of a parabolic move. However, with the high buying volume, we can expect this move to be upwards. 🧠💼This is not financial advice, and it is only my personal opinion on this cryptocurrency. Please do your own research before making any investment decisions.
Long
by itsparham96
1
Suicide because of loss. A story that didn't happen.This is a story about how a good friend of mine lost over 700.000,- in 9 hours. And about the importance of the role of YOUR psyche in trading. Some time ago, a fellow trader phoned me. Let's call him Tom. He traded occasionally, and by day was the CEO of a small company. We arranged to meet. It supposed to be an ordinary friendly conversation. There was no indication of what I was yet to hear... - You know, actually, I have another matter - here Tom suspended his voice. - Last week I lost more than half a million in the market. I'll admit that I was surprised. I knew he was making money in the market but I didn't think he was trading such amounts. Losing that kind of money for an occasional trader is no small matter. Therefore, before talking to him, I repeated to myself 23 ways to deal with losses (gathered from various sources, including a group of the world's best traders I had interviewed at one time). I was anxiously awaiting the meeting, I have had various traders with big losses but such a situation not yet. A loss of this magnitude, even more - in about 9 hours, can seriously shake the psyche. I have seen situations where people were on the verge of suicide, others were not able to sit down to the market for months, still others are haunted by remorse for years. The issue is as serious as possible. At the meeting Tom told me what happened... For several months he watched an outstanding trader who was able to grow his account 10 times in a month. At some point he decided that it was not difficult, deposited about 30 thousand and traded for a month. He took more than 670 thousand out of the market by putting 19 positions. Last night he decided that he would try to make it two million. He hoped there would be a move that would allow him to do so. He sat down around two in the morning and put 3 positions. Each for more than 40 lots. A few minutes before eleven the next day, they were all automatically closed at a loss. The account was cleared to zero. As he told me later, these entries were outside the system. To my surprise, Tom did not seem at all concerned about the loss! I questioned him in detail about the incident looking out for any signs of trauma, or at all remnants of a severe experience. I found nothing. There was not even a lowering of mood! Tom, as usual, was in a good mood. Intrigued, I began to inquire why he was not concerned about such a loss! I was sure she had meant something to him. It must have! True, he was the CEO of the company, but he didn't earn that much in it to be able to forfeit 700,000 in one evening. Tom responded to me with something that gave me food for thought for a long time and that I want to share with you: - This is virtual money. As long as you don't cash them out anything can happen to them. It's a virtual entity, it can disappear as quickly as it appeared. Only when you have it in your bank account does it become real, but until it does - it's just a row of numbers. That's how I've always approached the markets. It's just numbers, nothing more. Here he surprised me again. I encountered such an approach for the first time. For all the traders I have worked with so far, money mattered. Always. The depth of what Tom told me at the time didn't come to me until a few months later. In a nutshell, I can describe it this way… Each of us has some image of the importance of money in life. We bring this image to the market. A big loss (as well as a big gain, I've had such cases) can throw a person off balance for days, years or permanently. The essence of the problem is that the loss causes pain. This pain can be almost physical and can last for weeks or even months. There are traders who go through months of hell because of losses. On top of that, there are problems related to, for example, the judgment of the environment and the immediate family. I knew that the best traders are very tough and mentally resilient. This is one of the secrets of longevity in the market and the huge fortunes they build. Mental toughness is something I have been studying for many years, in the case of top traders it is outstanding. Here I came to understand that mental toughness has many forms, and the lack of response to very difficult experiences can be due to a different perception of the situation, a different value system or a different value scale. Tom is certainly very mentally tough, this I must admit. The story described is an example of how different traders approach markets and money differently. The way one thinks about money determines the psyche's reactions to profits and losses, and consequently the mental load. As long as Tom treats trading as a game of numbers he will be calm about the outcome. Neither profit nor loss will shake him. I'm sure I'll tell you more about this in other articles, because mental toughness is a little-known topic, and yet it's one of the pillars of success not only in trading, but... everywhere. Give it a boost 🚀 and drop a comment so we know to publish more for you. Cheers! Follow: www.tradingview.com
Education
by drSwierk
GBPUSD Post Trade Analysis 2024-01-29 : Valid LossGBPUSD Post Trade Analysis 2024-01-29 *Loss* 1. Valid risk entry loss for a valid loss A. Entry Valid B. Point of Interest Valid - 4H A.3 C. Valid Exit 2.What can I improve ? A. - I can input trade concept into Edgewonk Advance Journal Section. - I can add all info, pre trade screenshots, fundamental news - I can improved my fundamental analysis - First Mitigation Failed - will track and possible add no first mitigation to trade plan What would be my entry model Price Levels ? 1. Entry Price : 1.26750 2. Stop Loss : 1.26450 3. Take Profit : 1.27200 Could I take this Trade ? - Would set alert and have 1 hour to place trade - Valid Entry and Win Lessons - First mitigation is lower probability and Entry Model is a more valid Trade
Long
by Trader_Miles
How The Tr8dingN3rd Got SlappedIn my intraday-trading, I'm pretty good to make money on a regular basis. It's a long time since I got out of control. But yesterday, I messed up twice. I was going short in a level, where I knew it was the bottom. The S&P500 intraday Chart showed clear support. And if the S&P goes north, the NQ will too in most cases. Then I did not follow my (any) plan and did everything wrong. How could that happen? Well, I was distracted. I was DIS-Tracted - Off my track! This lead to Stress, which killed my Focus, and that was the perfect mix to mess up my trade completely. Not only that I made a loss, but I also missed out the HUGE move.... So, how to fix it? Go back to the roots. Pull out the "Flight Plan" and check every step in the process. It humbled me, and its GOOD. No super Trader...No Trading Hero...Just a Human with a talent that gets slapped from time to time. Happy Trading Y'all §8-)
CME_MINI:MNQ1!Education
by Tr8dingN3rd
2
HOW TO START BUILDING A STRATEGY?As it is said, A strategy is a reflection of a trader’s character . Whatever sentiments/emotions you have, reflect in your trading decisions. At first, people think that, ‘I will use xyz indicator and buy here and sell there’, thinking it’s easy to have a method that is simple. But when reality hits, all the simplicity runs out of the window with your money. Trading is not for those who take it lightly. You have to respect the market before coming up with a strategy that suits your personality/mindset/character. One might ask, what does personality have to do with trading? And that’s where all the secrets are. Newbie traders often run after YouTube channels, Twitter handles of some high MTM traders and try to copy them. They keep hopping from one setup to another. Because in the beginning, traders do not have the knowledge of risk management, importance of back testing etc. You should test your strategy for at least 100 trades before scrapping it. And that’s where they lack. But in my experience, you may learn the method from another trader but you cannot learn the mindset . You have to develop that on your own. There are certain ways of self-assessment when it comes to finding the right approach towards trading. Just because some day trader is making a killing in the market every day, doesn’t mean you can replicate the same performance too. You might be well suited for positional/swing trading. Just like that if someone is better in swing trading, you may be crafted for long term investing if not that even for scalping. There is a vast array of segments to choose from. From intraday to swing and scalping to options writing. You can decide any segment as per your patience level. The only goal should be to make money. You are not here to be right or wrong. You are here to make a living. Choosing a trading style is completely based on your patience level. If you are a patient trader then you can go for short to long term trading. Find the good setups, take the trade and sit tight. Your actions should be either target or stop loss. You can manage the trade as per your style e.g. , pyramiding or averaging. If you are an adrenaline junkie, then intraday, scalping & F&O trading is your cup of tea. But remember that the lesser the trade duration, more the chances of losses . Because these segments are much more risky than those of others. You need the skill of a sniper & the eye of an eagle to execute such trades and come out of it profitably. Now the question is how to decide? There are some ways you can shorten the learning curve, some of them are as follow… 1.Mentor👨‍🏫: Mentor is the person who is willing to share his experience to those who seek to shorten the learning curve. Warren Buffet had Benjamin Graham, Rakesh Jhunjhunwala had Radhakishan Damani . Everyone needs a mentor, be it in the form of books or a person . Learning what not to do is more important than learning what to do? And that is the biggest lesson I’ve learned from my mentors . A mentor teaches you that in the most practical ways by showing some real-life examples. He will also tell you when to trade and when not to. Because compulsive trading is one of the major reasons why traders lose big. So, finding a good mentor should be your priority. 2.Self-Learning🎓✍️: There are some successful self-made traders who learned from trial and error. But you need to check the time they took to be successful. It’s not impossible but it’s time consuming. Also, you need to have lots of patience and money as well. Because self-learning is like flying a plane by reading manuals. You have to do all the work from developing a strategy to back testing it and it's too lengthy process to start with. You can self-learn trading, but be ready to give it time. 3.Books📚: Aahh books… the first love of any trader. For me it still is. I read as much as possible. The very foundation of my trading journey is based on reading. I read many books in my initial days. Some of them still help me today. But textbook knowledge is not sufficient in real time trading . You can learn patterns such as triangle, channel, cup and handle and head and shoulders. But textbook patterns are so rare that it’s exhausting to spot them on charts let alone trade them, unless you have a knack for them. It’s a good start but not the best process. Above information should give you some perspective on how to approach the market and build your strategy. Strategy doesn’t just mean a trading setup (Entry & Exit). It includes everything from trade setup to your mindset. Find the best possible way, stick to it and follow the path. Eventually you will reach the destination. Keep learning, keep growing…!! 💗✨ Support TradingView✌️
NSE:BANKNIFTYEducation
by khushaljain023
2
🌸HOW YOUR BELIEFS SHAPE YOUR TRADING🌸 🌺Trading is not just about making money. it's also about understanding yourself and your beliefs. Your beliefs can shape the way you approach trading and ultimately impact your success. It's important to identify what we believe and how these thoughts influence our decision-making. 🌼The role of beliefs in trading is often underappreciated. A trader's beliefs can influence their perception of risk, their ability to handle losses, and their willingness to accept new information. Beliefs can also impact their emotional state and motivation, affecting their overall approach to trading. 💐Beliefs can be positive or negative, and they all play a crucial role in shaping our trading behavior. For instance, it is commonly believed that trading requires an intuitive sense, and that success comes from the "gut feeling." While this intuition is essential, it's also vital to think logically and systematically. As a trader, you should evaluate your methods and actions based on logic and data. 🌻Another belief that may impact trading is the 'fear of loss.' This belief comes from a reaction to the thought of losing our hard-earned money. Traders who may be influenced by this belief may avoid loss by being too cautious and missing promising opportunities in trading. Additionally, they may move too quickly and sell out too soon, taking small losses instead of giving trades a chance to earn enough to cover their expenses. 🍀Moreover, some traders believe they can't make money consistently. However, such a belief is likely to result in a failure mindset and a lack of effort to learn and develop skills. Failing to learn about risk management and technical analysis may lead to bigger losses, which will, in turn, affirm the belief that consistent profits are impossible. 🌸To turn negative beliefs around and transform them to suit favorable outcomes, a trader may need to replace negative thoughts with positive ones. Additionally, it may help to find influences that align with your trading goals, whether that's finding a mentor or joining a relevant trading community. Working with like-minded people helps keep your focus on your goals and learn from others' experiences and mistakes. It can boost your confidence and reinforce the belief that consistent profits are attainable, which can impact positively in your trading. 🌵In conclusion, a trader's beliefs heavily impact their trading. It's essential to examine and understand the positive and negative beliefs that influence one's trading behavior. By identifying negative beliefs, traders can have better control of their emotional state and approach to trading. Replacing erroneous beliefs with positive behaviors and working with like-minded traders can provide a path to a positive and successful trading journey. 🌺Hope u like my article. Please let me know what you think💋 Love, Anabel❤️ Please, support my work with like and comment! Love you, my dear followers!👩‍💻🌸
Education
by AnabelSignals
5
How To Win, By Learning How To Lose Hey there, so today I would like to introduce the first episode in what I would like start calling Mindset Mondays. So in this session we going to: - Learn how to overcome the fear of losing so you can trade with confidence and fearlessness - Discover how to leverage your losses and maximise your returns resulting in consistent and sustainable equity growth - Learn how to use your emotions as a signal to identify shortfalls and weaknesses in your overall trading approach which means refining your understanding about the markets and yourself, ultimately allowing you to trade with a carefree state of mind. So, be sure to watch all the way through if you want to learn how to win by learning how to lose.
by DeanMuller
Why do most traders end up losing moneyThis question is quite scary, but if you are a novice and see this question, congratulations, you are on the right path of trading. The most important lesson to learn before entering the financial markets is risk expectation. You can ask yourself, how much money do you want to make from trading? Is your goal asset appreciation, or a small fortune? If a trade loses money, will it affect your own life? Is your own character able to stop losses in time, or do you have no self-control? After asking these questions, we decide whether to enter the financial market. So why do the vast majority of traders lose money? 1. Because of the particularity of the financial market. I believe that many friends have heard of the 28 rule. For example, in the distribution of wealth in our society, 20% of people control 80% of social wealth; 20% of people will persist in encountering difficulties, and 80% of people will give up when encountering difficulties. The rule of 28 is ubiquitous in life, and it also determines what kind of people will succeed and what kind of people will fail. As for the financial market, it is crueler than real life, because there are no rules in this market, only human nature, so the financial market even surpasses the rule of 28, and less than 10% of people may make profits. In the face of money, most people want to make a big fortune with a small amount, and want to turn around by trading, so those who have stable personalities, strong self-control, low income expectations, and money in their hands are silently harvesting these people who are eager for quick success. Some people may say that the world is inherently unfair, and those who hold funds can only survive because of the capital. Actually no. We Xiaosan hold small funds, and we can achieve low return expectations, or we can do it slowly, but how many people are just anxious to make money? Just want to make a big difference with a small one? Just don’t regard money as money, and think it’s a big deal to take a gamble, and if it’s gone, it’s gone? So it has nothing to do with the amount of capital, but has something to do with people. In financial markets, human nature is the rule. 2. Too many people are dominated by human nature. As I said before, there are no rules in the financial market, and human nature is the rule. Trading is a very anti-human thing. Human nature is greedy for comfort, averse to risk, afraid of losing, feeling that one's level is higher than others, hating giving and learning, impatient, etc., which will be infinitely magnified in trading. There is a saying in the trading industry that trading can be profitable, mentality accounts for 70%, and technology accounts for 30%. In actual combat, it seems that it is not difficult for traders to see the market correctly, but it is very difficult to complete this wave of market and make profits. Why? I give two examples. For example, the problem of stop loss in trading. Seeking advantages and avoiding disadvantages is a characteristic of human nature, unwillingness to lose, unwilling to accept losses, this is human self-protection awareness. Stopping losses in the wrong direction means losing our real money, who can bear it? So in actual combat, many people rationally know that the direction is wrong, but they just don't stop losses, and even increase their positions against the trend, floating orders, allowing the stop loss to become bigger and bigger, and finally lead to serious losses. Another example is the profitable position in the transaction. The market trend always fluctuates upwards, or fluctuates downwards, and profit taking in positions is often encountered. Once profits are withdrawn, we will have a sense of insecurity in our hearts, worrying about the reversal of the market and losing profits. This insecurity is also due to human nature. Even if we rationally know that the profit target has not yet been reached, we should continue to hold positions, but the little emotion of longing for peace of mind has been tormenting us, and in the end we couldn't help but close the position, and made a lot of less money. We comfort ourselves that it is all right, at least there is no loss. But in fact, less earning = loss, because the amount you lose next time will be greater than the money you earn. In the long run, your overall loss will be. There are many such examples, such as betting on the market, heavy trading, unwillingness to admit defeat, stop loss leading to liquidation, etc., are all caused by the aversion to loss in human nature and the fear of failure. In fact, if we look at the trading market 100 years ago, it is basically the same as the current human nature problem. The weakness of human nature is very strong, and it is also the main reason why traders lose money. So at the beginning, I asked everyone to ask themselves those questions, just to let everyone understand their own personality, their current situation, and their human nature, so as to help you win certain opportunities in the trading market. Trading is like a free game. It seems that the threshold is low and no money is required, but in fact some hidden costs are contained in it, and the human nature is clearly played for you. Therefore, before making a transaction, you must have an existing risk expectation, and then think about making money.
FOREXCOM:XAUUSDEducation
by CheetahAttack