They say that wealth brings with it many unforeseen problems, yet most of would still prefer to have the opportunity to face the challenges that come from too much success. Unfortunately, every trader will sometimes have to handle the opposite set of problems that arise from a losing streak. Even the most successful Forex traders have tales to tell of bad patches when nothing seemed to right, and the ability to ride out those losing streaks until better days come is a valuable skill for anyone in the Forex market to acquire. Here are a few tips to bear in mind when a losing streak hits:
Keep a Diary
Bad results have at least one virtue in that they supply clues about what works and what doesn’t in the Forex market. But to learn those lessons you need a way to accurately analyze what you did. In a complex market like Forex it can be hard to remember all your trades and what you were thinking when you made them. Therefore it’s smart to keep a trading diary in which you write down your trades with a little commentary about why you made them. Through such a diary you can see both what you did wrong and recognize patterns of failure that enable you to constantly improve your strategies.
If you’ve hit a bad patch that’s probably not the time to increase your level of trading. Instead scale back your trading activity until circumstances look more favorable. If things appear to be going relentlessly bad, it may help to stop trading completely for a few days. Sometimes just taking a breather can restore your confidence and sharpen your view of the market by briefly gaining an outsiders perspective.
The worst possible way to respond to a losing streak is to panic. Keeping your emotions in check is necessary to maintaining the logic and fact based perspective that is most conducive to wise trading. If you feel yourself becoming upset, stop trading immediately and don’t make any more trades until your calm has returned.
Learning how to handle losses is a rite of passage for every long term trader in the Forex market. You will find that you get better at handling losing streaks the more experience you acquire. Hopefully those insights will also help minimize the frequency of your losing streaks.