Frustration can be a professional risk for forex traders, as losses and even huge drawdowns can happen every now and then.
This can lead to self-doubt and a lack of confidence in one’s own trading plan, which can then lead to over-trade or bad decision-making in an attempt to make up for one’s mistakes.
Think about your own trading experience for a moment and think of an example where you were frustrated with your own performance.
Were you able to think clearly about your next trades? Have you taken your losses personally and started to wonder if trading is really right for you?
Traders are competitive by nature and it is precisely this quality that makes us so vulnerable to losing trades.
But the good news is that it is possible to deal with these negative emotions and prevent them from affecting your trading decisions.
Here are three quick tips for you:
1. Don’t blame yourself!
Trying to recover from a loss or break a losing streak is easier said than done.
For some, it’s easier to target frustration at themselves and engage in negative self-talk. If you often find yourself in this situation, take it easy, dude!
There is no point in blaming yourself for not being able to predict what could easily be a black swan event.
No one – not even the smartest economist or number cruncher – knows for sure what the market’s next move will be.
Accept the loss, pat yourself on your risk management, note the lessons learned and move on.
2. Do your homework.
Now if you think your losing trades can often be attributed to a lack of preparation, you need to remind yourself to do your homework.
As the saying goes, prevention is better than cure, which means that you are less likely to encounter frustration when you put enough time and effort into doing fundamental and technical analysis.
Apart from that, you must not forget to plan your deals and define your action steps for various possible market scenarios.
Don’t set yourself up for frustration by throwing caution to the wind and making hasty trade setups.
3. Don’t give up on your trading strategy…yet.
Other traders target their frustration in their trading strategies. What is the point of analyzing the markets and sticking to a trading plan when the market is moving randomly anyway, right?
mistake!
The market environment may change constantly and that is the nature of the beast, but remember that consistent profitability can be achieved by staying disciplined and following a tried and tested trading plan.
If you are convinced that your current strategy is no longer suitable, try backtesting or improving your technique rather than giving in to frustration and rejecting it outright.
Keep in mind that trading is a marathon, not a sprint. There will be times when you will have a hard time keeping up with the market and that is okay.
Just remember to pace yourself, get your timing right, and focus on proper execution.