By now, you started trading actively, did some research regarding trading tactics, and watched numerous helpful and educative videos which helped you sharpen your senses and taught you how to profit. All of this led you, step by step, to success. The winning percentage just started rising month after month now. When you hit the numbers in a row, your adrenalin starts working and you get high on success. After such a winning row one reaches these heights and starts thinking of oneself as of pro which has a power of knowledge and cannot be stopped. This is where you get blind and slightly stupid in your arrogance and inevitably, fall happens – you hit the wall hard – it is just a matter of time.
Every decision and step you take right after this fall could easily determine your trading future from this point on. This will sound crazy, however, there is a right and wrong way of winning. You may take this preaching as rubbish especially if you are in winning swing at the moment of speaking. However, as I can easily foresee it right now, eventually at some point you will, for sure, come back to this article in the future. We will discuss this theme in two different aspects: on the macro level – kind of the zoomed-out point of view, and micro-level – where you need to understand when you are winning.
We propose to have look at these The Big three rules in terms of Forex trading:
Money Management
As we already spoke about it, money management is the most important thing in forex trading. At the end of the day, this is the thing that increases assets on your account or ruins you completely. Put together your plan: how much percentage to risk from your account, how many pips to risk, manage your trade, and pick wisely indicators that you will involve in trade.
Trade Psychology
The most important thing in trading psychology is patience. The long game is far superior to the short game. It is necessary to take initiative and develop the discipline to get to success. And last but not least the Technical Analysis.
Macro-Level
One needs to understand that trading psychology is a very important part of trading. Once you learn everything you are out there getting amazing trade entries, great money management, you are on the run, controlling your emotions, winning trades, and achieving what you dreamed of…
You think the world is yours, now you are untouchable, however, as we already explained, the moments of failure are inevitable at a certain point. To be completely honest, the moments of prolonged failure. The way you deal with failure will determine a lot in the future. One of the things that are quite important is not to give up and leave everything. It is just one fall, get your grip, and start again. All you have to do to get back on track is keep trading your system, do not try to jump in – do not think that you know more or better than the system, and keep repeating this recipe until you get back on winning tracks. If you could do only these three things you would win every time, especially long term. It is not that easy, right?
Trouble is, we are all emotional beings and we cannot change this fact. In trading Forex, we just need to eliminate and subdue our feelings as best as we can and keep doing this all the time. We can be emotional persons, but it is not recommendable to be an emotional trader. Mistakes that we all do when we are winning like you are trading overall and you are unstoppable and your winnings are just landing one on top of the other. While you are in such a run, your emotions are at the highest level, especially if this is your first time, and you never been here before. You cannot stop it. It is just beyond you, especially if this is the first-time experience. The biggest problem with this is that majority of new traders do not understand or see that they are only temporarily winning.
Huge misleading thoughts are ‘this is how it is going to be from now on’, and ‘all I got to do is keep doing what I’m doing and I’m in profit every month till the end of the days’, right? Everyone who reaches these levels is risking to drop off real fast. Professional trader’s opinion is – do not consider this like failure. Consider it as coming back to the true aim you had when you started trading. Let’s say you made 9% per month and now you are making 1,5%. This now is not a bad result – actually it is a great average percentage. The previous average result was the product of too many entries or very high leverage you used. The one incredible mistake that anyone can make is ‘if I’m getting this high win percentage and doing so well, why am I risking only 2% of my assets, when I should be risking way more than that’. It is truly foolish to act like this. Returns that you got are not real and not sustainable on a long term basis and the solution is not to increase your risk.
What you need to do is understand that fall was inevitable, it was supposed to happen. Be completely honest with yourself and analyze, were you following the rules or you were going higher, overtrading and overleveraging, and so on. When you finish the analysis, dust yourself off and get back in the game. Just because you hit this crash doesn’t mean that you are not up to this. It just means that you need to come back taking all experiences into consideration and following the rules this time.
Micro-Level
Here is how it looks on the micro-level: when you are actually in trade and winning, or you just closed winning trade, haven’t you felt regret of doing so? Just a little bit? Do not worry, every trader has been there. Everyone closed at least one winning trade with a speck of doubt ‘why have I did this just now’.
It may happen that you did not exit your winning trade when you thought you should. For example, you were in a winning trade that you saw it can bring 500 pips and suddenly, that price came back the other way, and tripped out to your Stop/Loss or your exit indicator, whatever the case it was, and you ended up closing this trade with only 275 pips. Of course, 500 pips are better than 275 pips, but a win is a win, and you shouldn’t be regretting over it.
The next thing that can be born out of this regret is the idea that you shouldn’t let it happen again, and thought that you should meddle in and stop the trade on 500 pips before it gets lower – this is something that should be avoided completely. The moment you do this, there is a possibility that price is going to come back a little bit, and then give you one really big 1500 pips move, and you are not going to take part in it. You will be watching with regret, what you have missed and professional traders will be getting this move. Why? Because they do not let their emotions to overpower them and get in a way of their trading systems. This is what you should do in the future as well.
There is another possible scenario. By now, you know how to calculate your risk and where to take profit, right? Sometimes, it can happen, that you may get really close to that ‘take profit’ point, and the price is going to come back and it will actually be closed as a loss. It is very true that you were so close. At this point, another form of regret floods you and you think if you just lowered a bit your first ‘take profit’ point you would have closed it with a win. The problem is that this causes you to start deviating from your system. As soon as you do this, slowly you are going to start leaving your pips behind. Again, this is the situation where you are trying to outsmart your system. The system that you made – if you did everything right – has been proven to work, and outsmarting it is not recommendable for profit.
According to many successful traders, regret is a wasted emotion. What these guys do is, keep up the plan, leave emotions out of the trade, and patiently win their trades. The whole point in trading is to get to profit not run from it. Our advice is to keep it smart and simple, follow the system, follow the rules, master your emotions, and stick to the plan. As you may guess by now, everything is up to you and how you control your emotions when they are at the highest level, i.e. when you are winning. We will do the best we can to support you on your way to success but this is something that you need to deal with yourself.
