Hello Traders, Legends, Gazillionaires and everyone in between!
I am currently still enrolled in the School of Pipsology. (Taking very detailed notes () However, I am beginning to understand how unavoidable it is to have losing trades. With those losing trades, since we are humans, there are bound to be emotions attached to those losing trades.
So, how do we as the "fragileā investors we are, overcome these emotions?
I can imagine being able to control, or ignore, oneās emotions can lead to proftibale results! I would love to begin mastering these ideas or processes.
I avoid my trading mistakes by applying my trading plans so honestly! In this case, I have a check list that I follow in my every new trade position; this method helps me a lot.
We can control our emotion by avoiding sitting before mt4 for all the time. Personally, I calculate my risk before entering into any trade. Then I set TP, SL and forget my trades. I am getting my result in this way
Yes mate,I agree with you. As a trader, we should always calculate our risk or how much risk we can take in each trade. Then set and forget, do other jobs for living.
To feel the fear, sit and watch your trades minute after minute and try intra day trading on a demo, without a real system. You will lose !
To minimise the emotions, set and forget !
The āgreedā is what gets us in to sub-optimal trades in the first place and a few other self-destructive things.
[Edit - and never forget, we are NOT āInvestorsā - we are Gamblers looking to take our bets when we have an edge ! - We are just as susceptible to āGamblerās ruinā as any other gamblers ! ]
If youāre trading you must have a strategy. You must from demo trading and experience know the win rate of your strategy and the maximum loss per losing trade. You must know that in any long run sequence of trades even the worst results likely will not destroy your account.
Therefore why worry about the losing trades? You canāt avoid them, you have built them into the strategy. And they wonāt stop you trading because you keep them individually small and collectively not serious.
Losing trades are not the problem, theyāre just like an admission fee, or taxes, or utility bills. Keep at it.
[quote=āJaavos, post:1, topic:118333ā]
I am beginning to understand how unavoidable it is to have losing trades. With those losing trades, since we are humans, there are bound to be emotions attached to those losing trades.
So, how do we as the "fragileā investors we are, overcome these emotions?
I can imagine being able to control, or ignore, oneās emotions can lead to proftibale results! I would love to begin mastering these ideas or processes.[/quote]
In my humble little view of things, the root cause why losses become an emotional problem is not actually so much to do with the losses, rather it is due to a lack of confidence in making gains.
If the Pieman said to Simon every time you give me 20 dollars I will give you 100 dollars back then Simple Simon would be coughing up 20 dollars all day longā¦or at least as long as he had confidence that the Pieman would keep his word.
In the same way every business incurs some costs in order to achieve a profit. The key issue for every business is therefore, ācan I make a net profit?ā
For traders, it is the same principle. If you are not in the market, you cannot make a profit. If you are in the market you will sometimes make a loss. The only issue is does your trading method, combined with your risk/equity management, generate a net profit over a period of time - and do you have the confidence that it will do so.
When your confidence is sufficient that your trading business makes a net profit, then losses are nothing more than a component of making a profit - nothing to be concerned about or emotional about - just like any other business, we just try to minimise the costs (not avoid) - and maximise the gains. That is optimisation.
The common thing I guess every trader face. The more you can control your emotion the more success will you get in your trading. Though my trading career is about 3 years still I have to control my emotions very cautiously. I tried to not look at my charts all the time. Before get into any trades I tried to calculate the result into my demo platform. Once I get a good result I jump into the real trade confidently.
You just need to accept all the ups and downs of trading. Losses are part of the game, an inevitable part I might add. Once you accept this simple truth, you will be much confident, less emotional and you will not make so many mistakes provoked by negative emotions like fear and greed. Besides each mistake should make your strategy even stronger.
In addition to what has already been said, we suggest you keep the amount you risk per trade small relative to the size of your account. This puts you in a better position both financially and emotionally to ride out losing streaks. You may find this earlier discussion about risk management helpful: How much units cost
As @Simple_Simon highlighted, itās important to hone your trading strategy, so your confidence in it can grow. This can be done through study, backtesting and forward testing which are discussed in this thread: What to do when not actively trading?
āIt is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.ā - Sun Tzu, The Art of War
The best thing one can do, in my opinion, is to trade. Trade on a demo account, later do so on a live account. But donāt just trade blindly - learn from every mistake, every mishap, every profit, learn all that you did wrong, all that you did right, gain confidence. The more confident - rightfully, justifiably confident -you are, the easier it will be to overcome your emotions.
After careful consideration, and painstaking questionnairesā¦ The obstacle responsible for your silence has been removed. Speak now orā¦ you know the rest.
I donāt think thereās really anything that can ādull the emotionsā other than just doing it, no matter what the endeavor is. If you go through the trading process enough, youāll both take profits enough and get punched in the face by the market enough to start understanding that itās about the total body of work, not individual trades.
Trade small and over time youāll see itās about managing risk and building wealth over a long period of time; thatās when individual trades start to hardly phase you at all. At least, thatās how I see itā¦ hope it helps.
keep your system SIMPLE: know what youāre looking for in your preferred set-up and be able to recognise it instantly when it occurs
make the rules of your system OBJECTIVE: prepare definitions of the patterns or price action youāre looking for: the set-up either complies with these or it doesnāt, no maybeās
TRAIN: run the strategy in demo or in micro-stakes or in back-testing so that its rules cover every possible scenario
PRACTICE: run the strategy with micro-stakes until its either consistently successful or it breaks
ACCEPT that unless you have a 100% win rate, you have built losses into your strategy: when they occur, they are part of the plan, not mistakes or failures or bad luck or market manipulation.
Try being in a war zone, not knowing whether you will live until tomorrowā¦ then come back and see whether losng a few dollars really matters that much !
) However, I am beginning to understand how unavoidable it is to have losing trades. With those losing trades, since we are humans, there are bound to be emotions attached to those losing trades.
