“If you can meet with Triumph and Disaster / and treat those two impostors just the same” wrote English poet Rudyard Kipling in 1910 in his ode to Victorian stoicism, “If.” Those words are printed on the wall of the players’ entrance to Centre Court at the All England Lawn Tennis and Croquet Club and are the last thing tennis players see before heading out to compete for the Wimbledon Championships. Forex traders would do well to paste those same words to the screen on their laptops.
When you are a forex trader losses are part of the game. Most bad trades will be more than balanced by the good trades or you won’t be a player for very long. But how you deal with a string of losses when they come will define your experience as a forex trader. When bad trades come one after another you can’t turn to self-destructive behavior. No over-eating, no bouts of all-night drinking. You can’t avoid the game and hope those losses disappear. This is the time you really need to heed Kipling’s words.
Guest post by FXTM
What are the positive steps a forex trader should take when facing a string of losses? There are two areas to focus on – your forex trading system and your own response to a bad run.
Begin with your system. If you are trading without a clear strategy it is impossible to pick apart your trades and determine what went wrong. If you need to put together a system after the fact, start with some paper trading or a software that runs backtesting. It won’t give you a true take on actual forex trading but it will be a way to organize your analytical skills and trading techniques.
Most likely you already have a system. This is the time to check under the hood and test all the components. Was the quality of your data good? Can your information be upgraded or made more timely. Do your computer programs need tweaking? If everything checks out and your forex trading system is performing the same during a series of losses as it has during successful trades there may be limitations in your current system.
After you make the necessary mechanical fixes it is time to take a reality check with your emotions as a forex trader. How have you been affected by your current downturn? Hopefully, you have remained undaunted by the losses and are still comfortable with future losses that undoubtedly will come your way.
Look again at your goals as a trader. If they are realistic, they will take into account a string of losses. If the losses are too important you may need more diversification or to trade currencies only with funds you are comfortable risking. No one likes to lose but anyone can be a trader when things are breaking well. Only when you can look at those two impostors, Triumph and Disaster, with equal dispassion in your transactions will you know you have found the correct balance as a forex trader.
Further reading: Learn How to Lose
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