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Lossesdohappen

Dealing with losses... before they occurLosses are part of this business. People do not react well to losses. Badly handled losses in trading can trigger bigger losses. Furthermore, these have the dangerous potential of wiping out entire accounts. If you want to make it as a trader you need to have a solid psychological approach to accept and handle losses. Lots of internet articles are suggesting that the way to prevent debilitating losses in trading is to follow risk management rules. What are those rules about? Basically, they are simple thresholds indicating the maximum $ /percentage you should risk per trade, day, month, etc. Having such rules is a must but it’s not enough. You can still lose much if your mind is not actually prepared to implement them. That’s why many traders set rules only to break them in the most inappropriate moments. People do not follow their own risk management rules because they are not psychologically prepared to accept losses. They are not prepared for the pain caused by a loss or a series of losses. The single most efficient way to handle losses is to accept them consciously and unconsciously. One of the most dangerous ways to react to losses is “revenge” or “on tilt” trading. This happens when the pain caused by a loss is so high that the trader loses his / her rationality and only wants his / her money back, disregarding most of the things he/she actually knows about the market. The brain cannot accept the emotional discomfort and the fastest solution is to quickly find a trade to make the money back. Most of the time, the quickest trade is in the same instrument (FX pair, stock, etc) that generated the initial loss, by averaging down/up or flipping. Some of the most experienced traders can work their way out but the vast majority will only make things worse. In order to prevent this kind of psychological slippage, you need to prepare your mind to consciously and unconsciously accept losses BEFORE they occur. With the help of a psychotherapist or by yourself you can perform visual exercises where you will imagine yourself being in a losing position and reacting the right way. This would desensitize you if done right. The technique I always use each time I open a position is to do that desensitization process “on the fly”. I watch the market and I see an opportunity. BEFORE opening the position, I imagine myself in the posture of facing that trade ending in a loss. After that, I imagine that trade going the way I want. I might even go back and forth (in my mind) a few times between losing and winning. This way, I prepare my unconscious mind. If I cannot imagine myself easily handling the loss (or the win) I will simply reduce size. Pay attention though, I am not recommending here to imagine yourself constantly losing because this would do more harm than good. This would be a separate topic about the power of visualization exercises.
OANDA:XAUUSDEducation
by Mihai_Iacob
14
Good statistical plan... so what can go wrong!? Another Forex Trading Snack. My law of big candles does fail and has a 33% failure rate. But that doesn’t mean you can not learn to bend the odds in your favor, along with putting you on the road to greater successes in the future. In my previous post on EURAUD I posted up a trading strategy. My law of large candle strategy. And I don’t want to get people thinking all I need to do is look for big candles and there-in-lies The secrets to success and money will rain down into your trading account! Trading is the hardest easy money you’ll ever try to make! Just a fact! Have a look at this AUDUSD same setup as my EA trade. The EA trade made over 100 pips and this one lost 30 pips. Why? Well, I did say that this strategy has a 33% failure rate according to my trade rules and statistics I’ve been keeping on the setup. So what gives, what’s wrong with the strategy if anything? As in all markets, the market is never wrong! The market will give you head fakes, the market is manipulated by bigger money players, my stop might have been to small, my entry might have been to tight, but most of all—it’s impossible to figure into the mix future volatility no matter if that volatility is 5 minutes from now or 5 hours or 5 days. It’s just impossible! As a trader take statistical outcomes into account before you change setup strategies or even trading strategies. Jumping around to fast from one thing to another all the while looking for success will have you passing up those diamonds in the ruff that will produce consistent positive results over time. Volatility happens! Learn from your efforts and stats you keep. Trading takes as much practice in trading a strategy as it does with everything in life you expect to improve at. In trading you either make dust or you will eat dust! All the best in your trades. This post isn’t trading advice, nor is it anything you should be trading without personally excepting all risk of loss involved with trading.
by PipsTradingClub