| |
| |
|
WebsiteAlways |
|
How To Handle A String Of Losses
Everybody hates to lose and unfortunately no one is blessed with the ability of foresight, therefore losses are an unavoidable part of trading. When we enter a trade we will either be right, or wrong, and even if we broke-even we'd still be classed as being wrong - as nobody enters into a trade just to break-even! When unsuccessful traders encounter a string of losses they begin to engage in self-destructive patterns that help them escape the pain they are experiencing. In this article we bring to light these self-destructive actions that can help you realize what you are doing before it takes hold of your physical health. If you find yourself already engaged in these patterns hopefully this article can help you to get you back on track as quickly as possible. The Destructive Patterns If you find yourself caught in a string of losses or a bad performing week/month be sure to monitor your behavior. It is during this time that you will be at your most vulnerable. You will begin to indulge in activities that at first seem harmless, but upon excessive use (or in time), begin to cause physical damage to your health. Ask yourself the following question: during during drawdown periods do I find myself over-indulging in these activities: > Food (especially junk food - eg. chocolate, ice-cream, chips)? > Sex (includes viewing pornography)? > Alcohol? > Drugs (includes excessive smoking)? > Laziness (find it difficult to wake up in the morning)? > Entertainment? All of the above taken in excessive doses can be detrimental to your own physical health (some even in small doses!). These activities above during your losing period are only covering up the pain of confronting the true issue, and your body tries to rid the emotional pain by trying to "fix" it with physical pleasures. Unfortunately it is going about it in the wrong way, so what should you do? Firstly... REALIZE WHAT YOU ARE DOING AND STOP IT! You need to realize what you're doing and you need to STOP doing it immediately! You can either decide to stop, or you'll be forced to stop when your body eventually breaks down and prevents you from any form of movement. It will be much more beneficial to you in the long-term if you can decide to stop *NOW*. Once you have stopped you now need to figure out a way to solve the pain - not by cutting out or neglecting it, but by staring it in the face. Bring your problems out into the light, be honest with yourself. There can be no growth without pain, you are experiencing the emotional pain, now it is time to find the error and therefore your growth. Begin Your Review The review process begins in two separate areas: You & Your System. Here are some checklists for you to go through to find out where the problem could lie: "YOUR SYSTEM" CHECKLIST > Was your system thoroughly tested prior to trading it (or paper traded if you do not have the capacity to programme your system into backtesting software)? > Did you test with out-of-sample data? > Do you even have a system???? If you do not, how do you even know if the method that you are trading is even profitable?? > Is your system's code correct? > Did you over-optimize your system? (what have we discussed about over-indulging?) > Did you paper trade your system prior to placing capital on it? > Did you trade with a small amount of capital prior to placing the rest of your funds on it? > Do you know the system's limitations? > Did you properly drill your system? (see our blog article on why I am the system designer from hell) "YOU" CHECKLIST > Is the current drawdown you are exhibiting with your system normal? > Are you comfortable with your system's historical drawdown performance? > Are you fully aware of the risks involved with your system and the instrument(s) you are trading? > Are you trading with funds that you are comfortable risking? > Are you relying too heavily on your performance? > Have you set realistic goals? As you can see there are generally two areas that you need to explore: the mechanical aspect - your system - and the emotional aspect - you. Both can be responsible for making the way you feel the way you do. It will either be an error on the system's side with how the system was tested and/or programmed, or it can be your own psychological profile not being comfortable with the system's performance. Your Answers = Change = Your Growth What steps should we now take? Now that we have begun a corrective process where we have stopped the evil nature of our over-indulging ways to take control we should continue our "corrective nature" by invoking our findings and taking ACTION in correcting our errors. If the problem was mechanical - fix it, if the problem was emotional either go about setting up new thought patterns, or change your current system. The answers lie in whether you need to expand your knowledge in system development, or whether you need to grow emotionally as a person. Unfortunately there is no easy road, and even if there was everybody would be doing it. Hopefully this article has made you ponder over some of your behaviors during drawdown periods, be sure to keep an eye on yourself and as always take care of your body, because there's no use in making all the money in the world when you don't have the physical capacity to enjoy it. Ryan Sheehy is the author of http://www.currencysecrets.com where you will find more free articles and resources on forex trading. You can also subscribe for free to their monthly newsletter.
MORE RESOURCES:
Currency-Trading - Google News |
|
|
|
RELATED ARTICLES
Writing A Trading Plan All professional traders have a trading plan. Trading futures is a zero sum game and those with a plan (and the discipline to apply it) will succeed over those that have no plan. Crisis of Confidence in the EU The European Union (EU) constitution was dealt a double blow, first by a French "no" vote on 29-May and then by a follow on "no" from the Netherlands on 01-Jun. To add insult to injury, one low level Italian diplomat quickly called for a referendum in Italy to decide if a return to the lira was warranted. How To Choose Wisely A FOREX Broker Most traders use a FOREX broker to handle their transactions. What exactly are brokers? Strictly speaking, brokers are individuals or companies that buy and sell orders according the investor's decisions. Getting a Forex Trading Education Many Americans are interested in getting involved in forex trading. Before doing this, you should get a forex trading education. Example of a Profitable Transaction in FOREX To make a profit, in the FOREX, a trader can enter the market as a *buy position* (known as going "long") or a *sell position*(known as going "short").For discussion, let's assume you've been studying the EURO. What is Forex Trading? Forex, or Foreign Exchange, is the simultaneous exchange of one country's currency for that of another.The way it works is an investor who wishes to purchase or sell one currency for another with the hope of making a profit when the value of the currencies change in favor of the investor. The Meaning of FOREX Price Charts and How to Use Them There is one very important factor that you should consider with great care if you are willing to become a successful, profitable Forex trader. This ever important factor that must be always present in the trader's portfolio, is the ability to read the charts. Forex Broker Involvement Optional To trade on the forex market, the largest financial market on the planet, one must use a forex broker. Not unlike a stock broker, a forex broker can also makes suggestions about which moves to make when exchanging foreign currency. Momentum Trading: A Practical Day Trading Strategy to Get Profits from Hot Stocks Momentum day trading can be extremely profitable when done correctly.. A Short Introduction To FOREX FOREX is the world's largest and most liquid trading market. Many consider FOREX as the best home business you can ever venture in. 5 Questions You Need To Have Answered Before You Back-Test Your Forex System As 90-95% of new forex traders lose money within the first 3-6 months this article helps to guide new forex traders by asking 5 questions that the forex trader needs to know prior to back-testing their forex system.Let us jump right in. Trading Timeframes Long TermLong term traders will work from end of day data and look to hold trades for a few weeks up to many months. Usually trend trading. Online Forex Trading Foreign exchange currency trading is also known as Forex trading, or FX, and has no single physical marketplace like the New York Stock Exchange does on Wall Street in New York or the Tokyo Stock Exchange does in Japan. The New York Stock Exchange and the Tokyo Stock Exchange online traders are limited to making purchases during the actual trading hours governed by New York Stock Exchange hours or the Japanese Stock Exchange's Tokyo hours. How Do Other Countries Devalue Their Currencies? Countries devalue their currencies only when they have no other way to correct past economic mistakes - whether their own or mistakes committed by their predecessors.The ills of a devaluation are still at least equal to its advantages. Assessing the Opportunities Presented by the New Iraqi Currency Could it be possible that you are staring right into the most spectacular financial opportunity of the century? Operation: Iraqi Freedom will undoubtedly be a war marked in history for loss and tragedy, American victory, and the rise of a nation with a new democratic government. But could it also be a war historically remembered for the financial opportunity it created for the sharp investors who keenly recognized an ephemeral chance at the right time?The War on Iraq ended with a nation placed on the footstool of many new operations. Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career. You know the old joke:"How do you make a million in the stock market? Start with two million?"There is no way around it, risk and stock market fees are a part of trading that you can`t avoid. But, you can manage your risk. How to Trade Currency We all know when you go on a trip to another country; you need to take some travelers checks and some cash in the currency of that country. This can be advantageous because one country's currency is usually worth more or less than the other. Forex Signal Services What are Forex signals? Forex signals are paid services offered by some brokers and independent Forex annalists. Companies that offer forex signals monitor and analyze the market for you, providing you with their data via desktop alerts, email or even SMS and pager alerts. Forex Made Easy for Everyone Forex made easy is as simple as you would want it to be. The foreign exchange market is a worldwide market and according to some estimates is almost as big as thirty times the turnover of the US Equity markets. The Nature of the Trading Business Consider the following: As a trader you are in a business. Your strongest opponent has plenty of capital.
|
| Interesting articles | Home | site map | Link |
| © 2006 |
