Forex trading brings out all sorts of emotions; fear, greed, hope, despair, joy. Regret, is another emotion that sometimes comes to pass but it needs to be avoided. Regret has very few positive intentions. All regret does is help to destroy your confidence and belittle your abilities.
Furthermore, there really is no need to regret a trade. If you trade, you will always lose some of the time so it’s better to have a balanced approach. That way you can keep a level head and you won’t get affected by the odd bad trade.
If you do these things you can never have reason to regret a trade:
Going long in a bull market
It’s one thing to lose money on a trade by being caught on the wrong side of the trend, but if you are trading on the long side and it’s a bull market then you are doing exactly the right thing. Every time you buy a dip in a bull market you are increasing your chances of success, that’s good. But they won’t always work out, it’s a fact of life.
A Guest Post by FXTM
Following your plan
Without fail, if you made a trading plan in the morning and you followed it to the letter, you have no reason to regret. You can only do as well as your preparation has allowed in the time you’ve had available. If that’s not working, it could mean you need to put even more time into your preparation of the plan.
Risk/reward was right
Sometimes good trades just don’t work out, while bad trades sometimes win. Trading is about probabilities so if you find a trade that has a 20% success rate but a 200% reward, then you’ve done the right thing in taking the trade, even if you lose. Over the long run, you’ll come out ahead.
Right position size
If you get greedy and put more money than usual on a trade then you’ve made a mistake and broken your rules. That may be something to regret but if you’ve followed your usual money management strategy then you have played in the correct way.
There’s no point regretting a trade if you’ve stuck to your risk, even if it would have resulted in larger profits. You trade a certain risk for a reason. Well, two reasons actually.
First, the risk you trade allows you to work free of stress and indecision. Second, the risk you trade allows your system to operate at it’s maximum long term potential.
If you follow your rules, your signals and your money management then there is no reason for ever regretting a bad trade.
Further reading: 5 most predictable currency pairs