How To Lose Properly

FX:EURUSD   Euro / U.S. Dollar
One of the few aspects of forex trading where you can experience some certainty is that you will have losses. Losses are a part of trading, and one of the key differences between successful traders and the rest is not how much they lose, but how they handle those losses. Being able to lose is key to being a winner in the long run.

How are you currently coping with your losses in trading? How do they affect you? What effect do they have on your performance and trading results?
Let's break down three steps that can help you better manage your Forex trading losses.

Step 1: Reduce losses
The first step in effectively dealing with losses is " Reducing losses". It is a key aspect because if you get this step right, you will have to use step 2 and 3 less in the future. The first step can be seen as a kind of "disease prevention".
There are three aspects that will help you reduce your trading losses and have an impact on how you deal with them.

1. Reduce your losses
When I talk about reducing your losses, I do not mean trying to reduce your losses per se, as it is not realistic, I mean focusing on your trading strategy, maintaining trading discipline and reducing loss-making trades that, for example, arise from trading that is not part of your strategy and that you can therefore avoid.
Losses that occur as a result of orderly trading are nothing more than losing trades that are part of the trade. Losses incurred from opening trades that go against your trading strategy, when "something seemed there" to you, can be seen as bad trading or something else that could have been avoided. In short, don't be fooled. Follow your forex strategy.

2. Reduce the value of your losses.
Obviously, it all comes down to risk management again. It's important to recognize that large losses have a significant impact on our emotional state, and can often have an impact on our trading behavior, usually not in the best way, such as trying to "get back at the market. Never increase the lot size after a losing trade.

3. Reduce the mental and emotional impact these losses have on you
Your reaction to losses is a factor in how you got those losses (whether you followed your strategy strictly or not), their magnitude, as well as your perception and belief about those losses. If you don't like to suffer losses, and feel that you shouldn't have losing trades or dealing with a trade where losing trades are possible, then your reaction will be very different from those people whose thinking is more realistic and who realize that losses are an inevitable part of trading, that results are probabilistic and that not every trade is a winning trade.
Are you fully aware of the fact that losses are a part of trading?
Are you fully aware of the fact that every trade is not lossless and has a probabilistic outcome?

Step 2: Reacting to losing trades
Knowing how to lose is the key to becoming a winner.
This step comes down to how you actually handle yourself the moment you realize that you may have to accept a loss. Dealing with loss is extremely difficult, it has to do with factors such as our ego, our desire to win and our human nature of aversion to loss, and that is why the "loss reduction" phase is so important. However, even that one step in terms of accepting losses can still be difficult, even more so if we have had losses or losses before. Because of this, it would be helpful to have some strategies that could help you stay calm, focused and disciplined while in the heat.

Many people are stopped or taken out of the trade by feelings of anxiety or anger. Their behavior begins to be driven by the emotions they are feeling in that moment, causing them to lose control and discipline. The whole point is to be able to manage your emotional state in real time and keep your mental faculties open to trading, as well as to be able to own yourself and keep a tight discipline.

The only quick and easy way to learn how to manage your emotional state is to learn how to manage your breathing. When you are stressed, your breathing usually changes. It becomes ten times more frequent and intermittent, so you need to breathe deeper and longer. This will help you overcome the stress response and keep yourself calm, composed and, most importantly, disciplined.
It also helps me to connect the palms of my hands using my fingers. This is a simple ancient Indian technique for calming the nerves.

Also, taking the cognitive aspect, keep your sanity in these situations. What thoughts usually visit you the moment you execute a losing trade? "The market always goes against me." "It shouldn't have happened," etc. ...

These are unhelpful thoughts because they only increase your stress level. A better question to ask yourself is the following: "What would a successful trader say to himself in a situation like this?" This may help you to direct your thinking in the right direction, and as a result affect your feelings and lead to more positive behavior.

Another way to manage your mindset is to actually create some affirmations, phrases that you can repeat to yourself when you are in a situation that will probably bring you a loss, and channel your thoughts, feelings and emotions and override any unconscious and habitual reactions that you might have developed in yourself. Remember that what you focus your attention on will determine your emotional state and discipline.

It can be very helpful to focus on phrases that help you concentrate on your trading process and do the right things (which is probably not easy) at the right times and for the right reasons; for example: "I'm a winner because I follow my trading plan."

Step 3: Recovering from losses
It's helpful to have some strategies that can help you stay calm, focused and disciplined while in the heat.

At the end of your trade, take stock of your losses today. What can you do to do this?
1.Evaluate your state of mind
How do you feel? On a scale of 10, evaluate your overall trading condition, with 10 being the other end of the scale, and 1 being the other end. Where are you now?
2. Evaluate and analyze the cause of your losses.
What type of loss occurred - a losing trade or a bad trade? Can you learn a lesson from the trade? Is there anything you can do about it in the future?
Evaluate and analyze the cause of the loss. What lesson can you learn from it?
3. Control your reactions.

There are a number of ways in which you can manage your reactions to losses.
On a cognitive level, you want to be fully accountable for your thoughts, your perceptions, and the meaning you give to your losses. Your losses have the meaning you give them. Loss does not mean, for example, that you are a loser. You can take a different perspective by looking at things more broadly, what lesson can I learn from this? How will I feel about it at the end of the day, at the end of the week, at the end of the month, after 6 months, after a year, after 5 years?
On a behavioral level, you could use a breathing or relaxation technique, go for a walk, or do some physical exercise to help you deal with feelings of loss.
Sometimes it's just a matter of time. One trading session or day can often be enough to help you get rid of some emotions, regain some perspective, and be ready to start trading again.

4. Get it together.
Come back and be ready to start trading forex again emotionally and strategically. Remember your trading plan, focus on your breathing, and then act.

Bottom line.
If you want to learn to lose like a winner, and develop skills that will help you improve your chances of becoming a successful Forex trader in the long run, remember:
- Reduce your losses: develop the ability to avoid strong reactions to losing trades, by reducing avoidable losses and bad trades; by managing position size and trade outcomes; and by developing a mindset that has a more positive view of losses.
- Properly respond to your losses by directing your thoughts and focusing your attention on controlling your breathing to create a state that will enable you to conduct yourself in the proper manner necessary for orderly trading.
- Learn to recover from your losses by assessing your condition, analyzing, controlling your reactions, and focusing on trading again.

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