“While many traders equate being right to making money, I believe that you are right if you follow your rules, regardless of your results. If you don’t have any rules, I would consider everything you do to be a mistake. I define a mistake as not following your rules.” – Dr. Van K. Tharp
You’re definitely happy whenever you make a profit, but what about a loss? Do you have the right attitude towards losses? Do you overreact when you incur a loss? Do you consider yourself a failure because of losses (something transitory)?
You needn’t feel too bad as a result of losses, and there’s no need for you to feel inferior to any trading expert. You might think that trading is also easy for them (whereas it’s not). You might wonder what’s wrong with you whenever there’s a loss. If you don’t address this issue properly, you can become your own worst enemy. Sooner or later every trader has some losses, but those who can deal with losses are resilient. Past losses shouldn’t preclude you from seeing the new opportunities the markets can offer you. Whenever your entry criteria are met, bear it in mind that you have reasons to place the trade, despite the risk of loss.
Profits and losses, which are a good example of polarity, are an experience every trader in the world must accept up front. You need to come to terms with your trading failure – real or perceived or potential? Does a temporary run of losses or another trader’s success really mean that you’ve failed? Certainly not. When top traders or marketers talk about their profits (and some of them hide their losses), you mustn’t feel that you’re a failure by comparison; neither should you think that the trade you want to take right now would be a failure. This unhelpful thinking attitude can hold you back from making an attempt, out of the fear that your chances of success are slim.
If you think all your trades must win, or if you never try new trades for fear of failing – then you’re involved in self sabotage. You can learn from your losses and be motivated to improve, or you can focus on what went wrong and stay within you comfort zone. It depends on what kind of trader you choose to be.
It’s not bad to evaluate the performances of a successful trader, providing it’s done in an objective manner. Instead of ‘stirring’ up competition – even if it’s just in your mind – acknowledge the accomplishments of others. At the same time, without becoming boastful, recognize your own unique abilities which can help your trading results if applied.
If I feel I’m likely to fail at a trade, I’d reduce my risk and make light of the situation. It’s better to gain small and lose small, than to gain big and lose big. If you’re always after big profits, you’ll never enjoy a long-term survival on the markets.
So instead of letting fear of losses immobilize you, put your heart into the task. Why not think of an occasion on which you had more profitable trades than you expected. What lesson did you learn form those profitable trades? How can that lesson help you conquer any fear of loss you may be experiencing now?
Which personal failing do you find most discouraging? For example, if you’ve given in to some trading weakness, does that mean you’re a hopeless trader? Or is it merely an indication that you need assistance? Instead of focusing on your losses, reflect on your profits as well.
No-one is perfect. Everyone fails at something, sometimes. If you give yourself a sensible risk-to-reward ratio, you’ll eventually gain more than you lose.
NB: Please watch out for my coming articles with these titles: ‘Worst-case Scenarios’, ‘Effective Swing Trading in Forex’, ‘Advanced Gap Trading’, ‘Resist the Lure of High Risk (Part 2).’ ‘3 Recent Gap Trades,’ ‘Trading for a Livelihood,’ ‘Force Index Indicator – A Tool Winners Use,’ ‘A New Way of Using the Williams’ Percentage Range,’ ‘If I Were a Trading Neophyte…,’ etc.
I’d like to conclude this article with more quotes from Dr. Van:
1. “Most people spend years training for their profession. Then, after they accumulate a little money, they just open an account and expect miracles. Trading success doesn’t happen like that; it only happens when you get training that would be equivalent to preparations for any profession… It’s more difficult to be a successful trader without a strong commitment and complementary personality traits.”
2. “If trading were easy, big money would make it almost impossible for people to enter the markets. But trading well is very difficult, so the entry requirements are easy.”
3. “A strategic trader is focused on the big picture rather than lots of facts and details; he is also more logical than emotional; and he is organized but not compulsive.”
Your questions and opinions are highly welcome.
With best regards,
Forex Signals Strategist, Funds Manager &Coach
Yahoo! Messenger ID: saazalmu
Get my Forex trading signals at: http://www.fxinstructor.com/en/analytics/ituglobal
And my past articles are also available at: www.ituglobalforex.blogspot.com
NB: There is risk of loss in trading, but it is possible to be a successful trader.
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