Let’s say you just had a huge losing streak. What would you most likely do next?
Are you the type of trader who gets so depressed that you can’t receive clear Forex trading signals, or are you the type of trader who can shake off this depression easily?
No matter how long you have been trading, there is always a risk of performance anxiety.
When things don’t go your way, there’s a chance you’ll become overly pessimistic and see the situation as a sign of your failure. As a result, your trading performance deteriorates further, eventually leading to you quitting trading.
This is clearly a problem. But like all problems, there is a solution. Instead of focusing on your weaknesses, look at them in a new light – a process called positive reappraisal.
For illustration purposes, let’s take a trader who has a habit of using very tight stops because he is afraid of losing too much.
Lately, he has been getting stopped out more often and ending up with a long losing streak. This makes him even more afraid to close deals and lose more money. Now he finds himself stuck in a vicious cycle that is so intense that he is unable to continue.
You could say that a forex trader’s attitude towards trading is negative, but through the process of positive re-evaluation, he can actually use this fundamental weakness as a strength.
Instead of focusing on the fear of loss, a trader can use this fear to re-evaluate their trades positively and view them as a position sizing issue. They can reduce their position sizes so they can take smaller risks while widening their stops.
If you can turn a negative thought, attitude, or trait into a positive thought, attitude, or trait, you can make it work for you instead of against you.
As a trader, let’s say you get easily overwhelmed by emotions when your trade starts going against you. As a result, you tend to widen your stop loss when your Forex trade is losing.
A little positive reappraisal can help you shift the focus away from how this tendency is holding you back and toward how it is helping you.
Since you know that these emotions arise when market conditions become unfavorable for your trades, when you find yourself wanting to widen your stops, you can actually use them as a signal to cut losses or reduce your position.
Basically, instead of letting them control you, you end up using your emotions as a signal to make better trading decisions.
As you can see, looking at the problem from a different angle can greatly help you improve your Forex trading.
It can give you new insights into how to approach a problem, and it can even help you turn your perceived weaknesses into strengths!