Learning to Lose so you can Win at Forex Trading | Vantage FX

Learning to Lose so you can Win at Forex Trading

April 16, 2019

Regardless of how good your trading strategy may be, you will never win 100% of your trades. Whether you choose to agree or disagree doesn’t really matter, because as soon as you accept this fact, you’ll be on your way to becoming a winning trader. Without a doubt, learning to lose is one of the most essential elements to profitability.

Before we get stuck into the details, ask yourself “is it really that bad if I take a loss on one or two positions?” Funnily enough, most people will say that it is. I mean, we’re never really taught to embrace failure growing up, at school, or at most jobs. That’s why many who start trading, struggle to succeed. It’s the inability to move past this and accept that losing happens. It’s the price we pay for being a trader. Instead of mulling losses, successful traders are concerned with: 1) Their net results (ie. not one single trade), and 2) Where they decide to pull the pin on a trade when it does go against them.

How to approach the market

Having learnt from my previous mistakes (of course they do still happen), I can claim with conviction that the hardest part of trading is to cut losing trades, pronto! The second toughest part is to let your winning trades run as long as they can. Without these two essential components, no trader could ever succeed in the long-run.

See, you can’t make money with a forex trading system that doesn’t have strict rules on when to kill a losing position. It’s unacceptable to cling on to the hope that the trade might turn around and end up being profitable, and even more unacceptable to average down, throwing good money into a bad trade.

Beginner traders generally think that if they pick a substantial winner, they’re a market wizard, and when they pick a losing trade, they feel like a dunce. The fact is, neither of these attitudes are correct. In the case of a big winner, it doesn’t mean that you made a good trade… it could have been sheer, blind luck. Conversely, in the case of the losing trade, you may have executed your plan to perfection, but the timing was just a smidgin out.

Ditching your ego

When it comes to Forex trading, ego is one of the most destructive qualities a trader can possess. If a trade has the compulsion to not accept mistakes then this will lead to consequences like over trading, trading on tilt, revenge trading, doubling down, trading too large a size in order to compensate for a loss… the list goes on, and guess what? Nothing on that list is a positive trait.

When your losses lose their emotional impact, and instead start to offer information on what you can improve on, you’ll be surprised at how quickly you can progress.

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