The Fear Of Loss! 5 Questions To Ask Yourself After Losing The Money

How to protect the psyche from damages? 5 questions restoring the trader’s peace after a series of losing trades. Use as needed.

When you lose money as a result of trading, and this will certainly happen, and more than once, ask yourself these five questions. They will help you to return to a quiet state much faster.

One of the biggest psychological problems (if not the biggest one) that absolutely all traders encounter in the trading process is the loss of money. Sometimes these losses are very large and extremely painful. And no matter what they are caused by – lack of experience, inattention or a banal error in the calculation of the trading lot.

Even if you did everything right, losses can happen. Moreover, just if you did everything seems to be right, but still lost money as a result, such losses are always perceived by us much more acute.

Losses have a greater psychological impact on us than profits.

In a sense, an absolutely calm attitude towards loss will probably be impossible in principle. But to minimize the emotional response to failure is quite capable of any trader, even a beginner.

Do not misunderstand me, I am not talking about the loss of 50% or even a complete drain of the entire deposit. In no case! But even with a well-established money management of 1-2% of the deposit, the loss will still cause an unpleasant emotional response inside. Sometimes it is so psychologically exhausting that after two consecutive losing trades a trader cannot return to trading during the week, constantly blaming himself for what happened and falling into deep doubts about his professionalism.

How to solve the problem of the fear of loss?

These five questions that I want to offer you today, you need to ask yourself after the loss. They will help take the situation as a given, stop mourning the resulting loss and focus your attention on the next transaction.

You can use them occasionally, as needed, or you can print and hang them next to the monitor. However, if you feel that unprofitable transactions affect your psycho-emotional background and harm trade, it is better to use them.

1. AM I SURE ABOUT MY SYSTEM, AND DO I KNOW IT WELL?

Before trading, using any trading system, you should not just test it on a historical period. It goes without saying. It is necessary to understand how the chosen system corresponds exactly to your nature, way and speed of thinking, your temperament.

And not only the system. The asset you are trading with, working timeframe, risk size. Even the most active for trading time of day is also of great importance. Someone is more active mentally in the morning, and someone after lunch. It depends on many factors.

But it is important to remember that there are no always profitable trading systems. Any system will give a strip of losses. Sometimes in several deals in a row. Therefore, to maintain calm and clarity of thought in such periods is very important.

If you are in the unprofitable band, or it was just one losing trade, but you have doubts about the accuracy and suitability of your trading system, go back to the test results for the historical period. But do not rush to change anything yet. You should never fuss. Make sure the system is working, and this will help you regain confidence and continue to move forward.

Example: Look at this trend strategy (see picture below) that is profitable, but it happened that the whole week, the system gave up to eight consecutive stop-losses! At risk 3% per trade, 24% of the deposit was lost… Agree, many traders trading in a similar strategy and getting 8 stop-loss in a row would even get a mental attack! And a lot of traders would throw away such strategy even after 3-4 stops in a row …

And now let’s look at the same strategy that traded throughout 2018. As a result, the deposit increased by more than 1.5 times – 168%. Not bad, right?

Here’s the biggest secret of successful Forex trading here – we need to let our strategy work and unfold within a reasonable period of time. Yes, there are times when the strategy burns money – we see the segments in history, but seeing the results of testing in history and knowing that it is impossible to avoid, we later win because statistics (positive test results in history) are on our side.

2. CAN I CHANGE WHAT HAPPENED?

No matter how much money you have lost, there is no way to change what happened. What happened, already happened. If you understand that you made a mistake, now is the time to rethink your trade and think about what led you to this error. Maybe it will sound banal, but in relation to the loss it is extremely important.

Negative experience is a great teacher. Sometimes it teaches much more effectively than a positive one.

If you have lost part of the deposit as a result of a series of losing trades, then do not reproach yourself and don‘t self-humiliate, going through 10,000 ways in your head that could have been used to avoid these losses. It will not bring you peace of mind and will not return the money. But might decently stress your nervous system. Do you need it? Accept what happened, draw conclusions and move on. What is important is not what you have lost, but what conclusions you have drawn from this situation. That is what will determine a lot in your future trade.

3. I WANT TO REVENGE THE MARKET?

Thirst for revenge influences everyone. That is our nature – we always want to punish the offender. But realizing this desire is very dangerous. There is a good saying that you probably know well: revenge is a dish that is served cold. If you really want to take revenge, then it is better to cool your head, restore emotional balance and after that return the lost.

Trading for revenge is a double problem. As soon as you begin trying to revenge the market in a fever, then all your rules and strategies fade away.

As a result, losses only increase. To the feeling of annoyance the insult is mixed with oneself for the fact that he so stupidly neglected his own rules, lost his composure and seriously damaged the deposit. That is, not just the sadness of the lost money, but also anger at himself.

And this may already push you to the idea that you are a bad trader. Such thoughts are very harmful. In this business, it is very important to believe in your strength, abilities and skills, to trust the web, and most importantly, the decisions you make.

4. DO I TAKE TOO BIG RISKS?

You can trade quite successfully, but your risk level may be too high. The risk should be comfortable in two ways, both in monetary terms and in relation to the size of the deposit. Sometimes these figures do not match, which also leads to additional psychological stress.

For example, you can set yourself a rule to risk in one transaction with no more than two percent of the deposit. And, from the point of view of capital management rules, this is correct and extremely reasonable. However, in monetary terms, the amount at risk will be very significant for you.

Even using elementary mathematics, we can assume that with a risk of 2% of the deposit and a risk / reward ratio of 2:1, with system test results that showed a 65% probability of a successful transaction, your trade will ultimately be profitable.

But the monetary equivalent of these 2% can create unnecessary psychological stress. In this case, reduce the risk and proceed no longer from the percentage of the deposit, but from the psychological tolerance of the amount.

Here’s a strategy we have discussed above, which provides a 3% risk in one trade. Considering that the strategy is trendy (it uses small stop-loss up to 20 pips and large take-profits if a long trend is captured) we can increase the risk because the risk-reward ratio is at least 1 to 2. Statistically, even this strategy has 51% loss-making trades and 49% profitable – we can make a good profit.

However, a monetary equivalent of 3% can create unnecessary psychological tension and will not be acceptable to every trader. In such a case – nothing terrible – reduce the risk to the extent you will be comfortable and already count the amount of lot not in relation to the deposit, but on the side of your psychological comfort, instead of the risky percentage, by putting the amount of money that is not painful to lose.

5. DO I ONLY RISK MY MONEY OR ANYTHING ELSE?

What is trading for you? Just trading to make a living or a way of self-expression? Or maybe this is a way to show everyone your “coolness”? Or are you trying to justify someone’s hopes, to prove something to yourself and to people who are important to you? You can still build various assumptions for a long time and sort through the options.

But one thing is clear: if you risk not only money, but part of yourself in every trade, then trading will not be calm.

The bottom line is that for us there is always something that is a hundred times more important than money. This is our self-esteem, our perception of ourselves, our value in our own eyes. If we perceive a losing trade as a public humiliation, then the stress will be very difficult as a result. If you want to become a professional trader, then you have to go through thousands of transactions during your career. Not all of them will be profitable.

In this context, it is very important to learn to separate yourself, your personality and your human qualities from the results of a particular transaction and all trade in general. Trading is only a business that could potentially become the main source of income, or it may not.

You are a person with all your advantages and disadvantages. Unprofitable transactions, no matter how many of them there are in your life, do not at all talk about your worthlessness and insolvency. You do not need to be constantly right and constantly prove something to someone. Transactions are just deals. There is no need to add one’s own life to them.

These are the five questions. The main thing is to answer them honestly, and then it will be much easier to survive the unprofitable lane!

Follow the Forextraderportal.com on Facebook! And trade calmly.