Uncontrolled emotions are the one of the greatest problems of the Forex traders. Almost every beginning trader, who starts with a demo account, experiences a great success in his trading, but fails to carry this success to the real money account. What is the problem? Emotions! When we lose, we feel frustration and sometimes even despair. Winning can cause us to lose control over our actions and turn our trading into a gambling or cause some serious overtrading. So here are the four easy steps to stop emotions from ruining your Forex trading:
- Single loss is not your fault. It is not even the market's fault. And it is not your system's fault. It is just a loss. No trader and no system can guarantee a 100% winning rate. So, losses should happen. If you lose, then your system works. It may even lose again, but that should not change your perception of the system's viability. Trading does not work with a single loss or win; it works with the loss rate and risk-to-reward ratios. So, the next time you lose, remember that there is no one to blame because there is no guilt in losing.
- If losses prevail over the winning positions, then check your risk-to-reward ratio first. If each of your losses is less than a third of your single winning position, then maybe your system is intended to work with 65% of your positions in the red zone? If your risk-to-reward ratio does not compensate your poor loss-to-win ratio, you still do not have to blame yourself, the market, or your system. Probably, it is just a wrong system for the market you are trading in. Times change, and the old systems stop working while the new ones are created. Just switch to something else and continue your pursuit of success.
- A single winning position is not an indicator of your success. Same as with losses, do not treat a single win as your accomplishment. It is just a part of the routine process of trading Forex.
- If your winning rate is high during the long period of time and the risk-to-reward ratio is rather low then I can congratulate you with finding the right strategy that worked fine for the kind of market you were trading on during that period. That is it! Stick with it until your winning rate declines below a reasonable level. Then turn to the step #2.