Keep Positive Attitude
As psychological elements of trading go, few are more important than remaining upbeat about your trading future. One of the most common occurrences amongst traders that lose heavily in the first few phases of their trading career is a knee-jerk withdrawal of capital and closing of the trading account. The psychology runs that when things are going well, you feel optimistic, yet as soon as things go wrong you enter shut down, and go out of your way to protect yourself from further capital harm. As it goes, trading forex will inevitably bring you successes and failures, and instead of seeing each failure as a negative, you should take it as a positive for going forward with your account.
Learn From Your Mistakes
As a trader of any ilk, learning from your mistakes is as important here as it is in any other walk of life. You need to make sure that your mistakes are turned into opportunities, and highlight the errors of your mindset at the time when you positioned the trade. A good technique here is to conduct a post-match analysis after every failed trade (and, if you find the time, after every successful trade too). You want to think about why you traded like you did, how it worked out and what the lessons to be learned from that are. You also need to devote some time to working out why things didn’t go according to plan, which will better inform your decision-making going forward and allow you to move on from your losses.
A lot of trading concerns psychology, and falling into the traps of negativity as you lose heavily for the first time is the locus classicus. Treat each mistake as a costly learning opportunity, and move on from it to the next position as quickly as you can.
Review Bad Decisions
There is a difference in a position that fails because of bad luck and one that fails because of bad judgement. At times, it can seem difficult for the trader to readily distinguish between the two, but reviewing bad decisions where you made a simple error is crucial to your ongoing learning and development as a trader. Remember that bad decisions are inevitable when you are inexperienced, but getting frustrated and flustered in the face of adversity will do you no favours. Cooley examine where and why you went wrong, and try to draw something from it. Keep a positive attitude about your trading – these things happen, and provided you’re not playing with more money than you can afford to lose, it might be the best mistake you ever made.
Move On To The Next Trade
When an error creeps up, or a trade just simply doesn’t work out, you need to move on. The best cure for a failed position is an immediately following profitable one. The more quickly you’re able to judge what went wrong and assess your trading strategies going forward, the better able you will be to trade profitably in future.
Trading is all about ups and downs: when you’re up, it feels like the world is behind you and you can do no wrong. When you’re down, you feel so financially and emotionally involved that you can think about packing it all in and giving up. So long as you recognise that ultimately this is one blip in a potentially long line of successful trades, you can devise the right mindset to cope with the adversities of trading as they arise.