Learning From Failures or Loses

[Sleeknixon]

John just blew his trading account again. I used the word again because this is about the fifth time its happening. This time is just a thousand dollars that got burnt in less than a week. John as usual; because of he doggedness is trying to raise money to replenish his trading account once again.
What could be wrong with him? When I asked him about this last loss, he said he was actually making profits before luck ran against him! Now can you tell what the problem is with our friend John?

He is attributing his failures to luck! He is looking for money to fund his account again without figuring out the real problem. Your guess is as good as mine, the next money will go out in flames because 'luck' will soon run against him again. Does this story sounds familiar? Have you passed through the road before? How can you learn from your failures or loses?

Success has many friends and family but failure is an orphan. So goes the saying. People are attracted to success but one secret that many people ignore in forex trading is your ability to befriend failure and learn from him! In the case of John, he confirmed that he was making profit in most of the trades he entered, so what made him lose?

Check this out: you are watching the market and price is falling or moving down fast. You decided to jump in, within a few seconds you are already in profits! Wow! Great trade? Within five minutes, twelve pips profit is already showing. Then as the candle is closing, it starts reducing and gradually it becomes negative. Out of panic you decided to jump out when it was minus twenty pips.
This is an example of a trader with no system in place. No rules for entry and exit, he is only chasing price. And because the broker is offering you a leverage of 1:400 that minus twenty pips was actually two hundred dollars.

Low and behold, the market starts going to his direction again after that panic exit, John's normal reaction is to get in fast this time, the market starts stalling, John's thinking is: 'the broker is monitoring my trades and they are trading against me'
How do you avoid this scenario in your trade? Find out in the concluding part of this post...

 

[Sleeknixon]

What Professionals Do
In the first part of this post, I narrated the story of John who continue to burn his account and how he thinks that the brokers are trading against his position.
To some extent he's actually right because for the forex market to work, somebody have to absorb your orders in the opposite direction by trading against you. But please be assured that your account is too insignificant to be the target of your broker.
Professional traders do experience bad trades. When this happens they carry out a post mortem or an inquest to know why. They learn from their failures so as not to repeat such mistakes again, that is the difference between a professional trader and an armature.
Engineers do it.
Doctors do it
Aircraft investigators do it. I love watching that program of discovery channel: air crash investigation.
The army do it.

How can you make this work? Get a trading journal or spreadsheet and record all your trades.
Something like this:

Date Time Pair order B/S Entry Price stop loss Profit target How long Out come Lesson
24/` 7am G/J Sell 154.36 154.79 153.38 4hrs Success I waited for the activation....


When you do this on a daily basis, by the weekend, you review all the trades you entered during the week and learn from them.

 

[btaliat]

This is truly educative and informative post. I wouldn't blame John, most traders be it crypto or forex always chase after price and not really the market nature.

Most people do fall into this category because they don't obey simple rule of investment that asks them to only invest what they can afford to kose. It takes a strong jesrt not to fall into panic mode seeing his money dwindling down.

Also, most people don't have target. They don't set target, this will prevent them to know the right time to exit and even enter a trade. They always believe that trade can be done emotionally.

 

[destinyrim]

Trading psychology is a concept that I believe every trader should read and understand before starting forex trading. It is better if a trader stays away from emotions like greed and revenge while trading, as they can lead to high losses. Traders should use risk management strategies to reduce the chance of blowing their trading accounts.

 

[eldavis]

It's Impossible to attain success in forex trading without having some experience in failure. Today even experts still make one or two losses, in every mistake we make there is a lesson to learn from it but most traders do not learn this cause they let their emotions get the best of them.

 

[Jack Reacher]

In any type of work or business, learning is essential. Understanding what the man is trying to do and where it will take him is essential. The right learning is essential for traders to make the right decisions about their business. Before you trade, it is a huge decision to make. Eurotrader is the company I am currently trading with. They provide me with a lot of fast and easy educational materials, and then they give me step-by-step analysis.

 

[Thanosis]

Learning from failures and losses is the only way to stay motivated in forex trading. There is no other way one could survive losing the trades. The trader must analyse the trades to find out the mistakes and try to avoid those mistakes in future.

 

[Neuroid]

I would rather not compare losses with failures when I know that they have been important building blocks of my success. My profits surely made me happy and filled my pockets. But when I look back, I see how much losses helped me grow. They made me well-versed with the moves and situations that I should avoid in the past. They helped me build a strong strategy that has been giving me great profits since then.

 

[Ponmo]

A person who has never failed won’t ever know how precious success can be. This fits well in all aspects of life including forex trading.
Firstly, it’s just impossible to move ahead without making losses.
Secondly, it’s also impossible to move ahead if you keep repeating the same mistakes.
Simply know that making mistakes is not bad as long as you are taking lessons from them. It’s sometimes better than making profits if you consider your long-term success.

 

[Immilash]

This is really educative and instructive post. I wouldn't fault John, most brokers be it crypto or forex consistently pursue cost and not actually the market nature.

A great many people really do fall into this classification since they don't comply with straightforward decide of speculation that asks them to just contribute what they can bear to kose. It takes a solid jesrt not to fall into alarm mode seeing his cash waning down.

Likewise, the vast majority don't have target. They don't set objective, this will forestall them to know the ideal opportunity to exit and even enter an exchange. They generally accept that exchange should be possible inwardly.

 

[moonchild]

I like the flow of this post, trading is one of the careers in the world that brings out the true nature of humans(primitive), we are risk averse primitively when things are going okay, but when we are in distress we tend to take bigger and most of the times uncalculated risks, Human Nature.

That's why trading psychology is created, to numb any feeling or rush to get into a trade, to just follow the market and the moves not our impulse feeling, trading is really tricky, especially for beginners, the come in with a wrong mindset, I came in with that kind of mindset, but experience they said is a great teacher, anytime you are in a losing trade, don't just close it, screenshot that trade and go over it later and understand the reason you fail, write it on your trading note.

 

[Good luck]

A lot of people have traded Bitcoin and have loss a lot money there but it doesn't make them to stop trading .it is a game of luck and you never can tell when the market will rise and it will boost up for the trader to make good money.If you fail,you try again so as to rise that is the excess of life.

 

[Nimrod]

Thank you for sharing your thoughts! According to me, the fact that the losing traders think too much about recovering their losses makes them lose even more. If they see their losses as lessons, they won’t feel the same and would look for areas that need to be improved.

 

[Chlamys]

Losing money is a part of your trading career. You will make losses even if you have started making consistent profits. That’s also important because one’s losses are the other’s profits. That’s basically to maintain a balance in the forex market and to make the market a market.

 

[Mataracy]

I belive that trading forex require one to be able to rake risk and also make sure that one is well rooted about what forex is all about.
One should become a professional and exparte in it though that may not erase failure completely but will definitely reduced completely.
So one also need to learn from failure all the time its occurred and how to be on the saver side.

 

[Zonked]

When you are doing something, there will always be only two outcomes- failure and success and both of them are equally true and possible.
The same goes with trading. At one time, you can make a profit and at the other, there will be a loss. It’s okay both ways. Learn to become a learner so that you can improve the consistency of your profits. But losses will always be okay as long as you are learning to improve.

 

[shirleencomer]

Learning from your losses is essential to progress as a trader. Traders should know why their strategies failed or they didn’t perform well. To find out that, traders should backtest their strategies. Also, keeping a record of your trades becomes primary here. If you maintain a trading journal, you can compare your trades and find out what areas need improvement.

 

[Eduard Hahn]

Traders need to have the right attitude and approach towards failure or losses. Many new traders end up getting disheartened and quit trading. Instead they should have an approach for learning from that mistake and starting over.

 

[Shaf]

Trading forex without a system that you follow is just another type of gambling, relying on luck which in most cases works against you.

If John had actually taken time to learn what to do, applied the knowledge acquired and controlled his emotions during the trade, he wouldn't be in loss, or at least, he would still have his capital to go into another trade.

It's also not just enough to have a system, but you should try to ensure that it is successfully back tested over a number of trades to work out at least 50% of the time so you can break even.

 

[Wordsmith]

I don’t see any harm in losing as long as you are learning from your mistakes. Your profits might fill your pockets but losses, on the other hand, widen your knowledge by giving you experiences and lessons. You add another chapter to your knowledge about what you shouldn’t do in your coming trades.