How to cope with losing trades
In this video:
00:30 – What do you do when you have a run of bad trades?
01:14 – Accepting the rough with the smooth
02:38 – It’s frustrating and hard to deal with
03:11 – Client makes 11% last week on her trading account
04:09 – Losing weeks are a part of trading
04:55 – Don’t go changing your system
05:24 – Stay away from the forums, control your emotions
What happens when you have multiple losing trades and you're having a really bad trading week? Let's talk about that and more right now.
Hi, Forex Traders, Andrew Mitchem here, the owner of the Forex Trading Coach. Today is Friday, the 4th of March and I want to talk about something that you won't find many people talking about this subject.
What do you do when you have a run of bad trades?
What happens when you have a losing streak? What happens when you have bad days and you have bad weeks? The reason I want to talk about that is because this week, I've had one of my worst trading weeks for many, many months, if not years. It's just been one of those weeks and so I want to address that because how you react to that is actually really important to your longer term success as a Forex trader.
Now, as a trader we have to accept that losing trades are a part of trading and of course, most people understand that, but what happens when you get multiple losing trades all in a row and you had a bad week? That just happens, yes, but it's not that easy to deal with sometimes.
Accepting the rough with the smooth
As traders we need to accept that losing trades are a part of trading, but also accept the rough with the smooth. As an example, the vast majority of my weeks I make profit and make some really good profit, but this week I've made a reasonable loss.
How do you cope with that? Firstly, of course you can control the loss that you take per trade. What you don't want to do is have one or two really bad trades that make massive losses and then have small gains that just claw back a tiny bit, but you still end up with a loss. I like to have controlled risk and equal risk on every trade. Even so, I've had many losing trades this week and overall I'm in a loss. Why's that? It's just been one of those weeks.
I've had retracement trades that have almost retraced to my entry level but they haven't quite, but then they've turned around and gone and hit the full profit but I've not got anything out of the trade because I've not actually been filled into the market. I've had trades that have moved almost to my profit target and then almost hit that level and I haven't been there to watch the trades that have happened overnight, let's say, and by the time I wake up in the morning, look at my charts, it's got within a few pips of my profit target and it's come all the way back down again. I've taken either a small profit or a loss.
I've had other trades that have gone almost down to my stop loss, have just stopped me out by a pip or so and then they've turned around and gone to the profit target. It's very, very frustrating.
It’s frustrating and hard to deal with
There is no doubt about it. It's frustrating, and it's annoying, and it's quite hard to deal with from time to time. When that happens, you just tend to find that that happens trade, after trade, after trade, which is what I've experienced personally this week.
Like I said, longer term, you've got to look at trading as a bigger picture, as over several months, quarters, half years, yearly, et cetera. Don't just get too stressed and too worried on what's happened just today or just this week.
Client makes 11% last week on her trading account
As an example, I had a fantastic e-mail from a client last week who said, “Andrew, I've made over 11% on my account.” Now, I've not heard from her this week, so maybe her week's been not quite so good. I don't know, but if you had really good weeks like that you can afford to losing weeks.
She made 11% last week, let's say … I don't know, but let's use my example, she's down about 4% for the week. While not good, she's still … If you take the longer term approach, she's still up for the last two weeks 7%. I'm just making those figures up in terms of her losses there but she actually did make 11% in the last week. Again, look at the longer picture, the bigger picture. Don't just get too worried about what's happening just right now. The same also when you have great trading weeks.
Don't get all excited too much because you had a 11% gain that week. Fantastic, really good, pat yourself on the back, well done but also accept that from time to time you are going to get losing weeks.
Losing weeks are a part of trading
That great week of 11% will get brought down on an average day but providing that overall the longer time frame … Or the longer term, you are making consistent gains, that's the most important thing. You just have to accept that longer term, your equity term would not just keep going up in a straight line.
You will get dips and then it will hopefully then raise again, and then you'll get another week that you'll have a bad trading week. It will pull back again, and then it will go up again. You have to accept that as part of the traders, no different to any other investment. You can't go and buy a house and accept that it's just going to keep going up, and up, and up, and up in value. Sometimes there will be pull backs and with any investment, that's just a part of the nature of the game that we're in.
Don’t go changing your system
One thing you should definitely try to avoid is don't go chopping and changing your system just because this week you've had a run of losing trades. Accept that your system won't work perfectly all the time but have faith in your system, have faith in your own trading ability because you know that longer term, you're going to have a good week again that's going to make up for more than this week's losses and you're going to continue back on the right side.
Stay away from the forums, control your emotions
Also, don't just suddenly throw your arms up in the air and say, “Oh, it's all gone wrong. The system is rubbish.” Or, “I need to go back to the forums to find the next latest, greatest system.”
I don't need to go rushing out buying a $97.00 robot all of a sudden or some new indicator just because I've had a few losing trades. Unfortunately, people do that from time to time. It's quite important to try and keep your emotions out of your trading as much as you possibly can and as I've mentioned, come back to accept the fact that losing trades, or losing days, or losing weeks … Sometimes even losing months are just part of trading. When you understand that and accept that, it will help you for when you do have those times where things are not going quite so well.
I hope that helps. As I've mentioned, it's probably not a story that many people will talk about and most people always out there willing to share with you their success stories. I'm here as a trader openly telling you I've had a bad week. It's part of trading, it's part of life, get over it, get on with it, let's look forward to next Monday and hopefully there's a really good week just around the corner. I hope that helps you because it is a really important aspect of trading that some people do struggle with and not many people talk about.
If there's anything else I can help you with, drop me an e-mail [email protected] and I look forward to talking to you at this time next week.
Bye for now.