Whether they care to admit it or not, most traders love scalping and other methods of high frequency trading. The question of whether it is consistently profitable, is another story, but the allure of quick money is one of the reasons people decide to trade in the first place. Many will adjust their trading strategies to match more longer term goals, but many of these traders will maintain an account where they are likely trading very frequently.
Any seasoned trader will tell you that losing is a part of forex trading. But is coping after a loss easier said than done? Not really – you can bounce back from one or a bout of losses if you adopt the right frame of mind and view every loss as a learning opportunity. Here are some tips on how you can get back on your feet after sustaining trading losses.
Fundamentals drive markets. Fundamentals consist of news, policies and information related to economies, and ultimately, currencies. What drives fundamentals are reactions to the news underpinned by greed and fear. Overlain on top of these emotions, are the tendency of humans to move in groups. This is related to fear and the quest for safety in numbers. People are also creatures of habit, often bad ones. Taken together, this qualities added to “group think” or herd mentality translated to markets can mean bubbles, panics, spikes, crashes, or “irrational exuberance” to quote former U.S. Fed Chairman Greenspan...or just another trading day.
There is couple of steps you need to follow when it comes to discipline:
Know your targets, make it realistic and stick to it. 20-100 pips at a time sound pretty reasonable.
Say a firm no to overtrade. If you lost money today, get away from the computer. Tomorrow is another day and many new opportunities to make money. There is no hassle.
It happens to all of us: after a bad loss based on a sloppy decision we just can’t stop that building up poison inside of us. Anger and revenge makes us make some more sloppy trades and in couple of minutes the trading account in empty and you cannot stop yourself from shaking!
Controlling your emotions is almost EVERYTHING in forex trading. No reliable strategy will save your from self-destruction if you don’t learn how to control that wild monster inside your heart.
Angry trades will not only make you not see clear, but also try to hunt down the possibilities to make the lost money back right away. Revenge is a powerful motivator. It is so controlling that it often clouds our rationality. The worst part of it all – in most cases you don’t even know you are engaged in angry trading until you are completely broke!