How to manage a run of losing trades



#366: How to manage a run of losing trades

In this video:
00:25 – Trader struggles with losing trades
01:41 – Your strategy stops working
02:26 – No trading results are ever even
03:13 – Trade a variety of different time frame charts
04:15 – 7 closed trades and a 7% account gain this week
05:15 – Things will be different next week. Be flexible
06:14 – Examples of using Fib levels

What happens to you when you’re in a losing streak of trades? How do you cope? How do you manage with it? Let’s talk about that and more, right now.

Hey traders, Andrew Mitchem here at The Forex Trading Coach with the video and podcast number 366.

Trader struggles with losing trades

So I’ve received an interesting email from somebody this week. They’re not a client, but they were saying, “Andrew, I’m having a really bad losing streak right now. My trades are mostly going wrong. I’m losing money. What do I do? How do I cope with it?” And it’s a really interesting question because of course, nobody writes to say, “Hey, I’m having a fantastic time. My trades are going really well. And I now want to change systems and jump in and take your course.” But if someone is having a losing run, then they write and say, “Well, how do I overcome this?”

So it’s really interesting that that happens. And it’s a tricky one to answer, but I’ll do my best to give you an explanation of how we trade and help overcome that. Because to me, it’s really important that now I’m assuming this person has a good strategy that’s been profitable in the past. If you’re just jumping straight into a strategy and there’s no proof behind it or you don’t know how it was created or it’s a logic or it’s theory, and it’s not working. Well, that might be different. You might want to sort of think about jumping out of that one pretty quick.

Your strategy stops working

But I’m assuming, for now, that you’ve got yourself a strategy that’s been profitable, it’s been proven in the past, and now all of a sudden, it’s not working for you. Now, if that strategy has been good in the past, logic would suggest that there’s no reason why it probably won’t come right again, but you’ve still got to get through this time period that you’re in right now, where things are going wrong.

So I think it’s really important to start with, that you actually, if you’ve got confidence and faith in your strategy, and you’ve created this strategy yourself, and you know it works, is to stick at it. Don’t go trying to tweak it. Don’t try optimising it. Don’t add other indicators or changing it because that’s likely just to mess with you and mess with the logic and the strategy.

No trading results are ever even

Don’t forget also that no trading or any investment for that matter is a straight-line return. It just doesn’t happen. Nothing is perfect all the way through. You’re not going to make 5% month after month after month after month, perfect straight line. It doesn’t happen. You’ll still end up with the same result maybe after a year, but you’re going to make 2% minus 4% plus 6%. Depending on how your strategy goes, but you’ll still get to that same overall result, but no way do you flat line equal results all the time. So you just need to accept that you might be in a situation where the market’s not reacting perfectly to the strategy that you have.

Trade a variety of different time frame charts

So here at The Forex Trading Coach, the way that we try to overcome that is we trade a variety of different timeframe charts. Now, to give you an example, this week, I’ve seen very, very little on the shorter timeframe charts. I’ve taken only two trades, three trades, sorry, on the daily charts, two of which closed for profit, one’s still in, and I’ve taken another one just today about an hour ago. So the two that have closed for profit on the pound-yen and Canadian-yen made a 2.7 to one reward to risk and 3.1 to one reward to risk. Put those two together, half percent risk on each. And that’s given us a 2.9% gain. I also have a breakout strategy that takes me about five minutes once a week on a Monday, that made a full profit for 1.5%. And I’ve taken only four 12-hour charts in the entire week. Still got Friday to go, but only taken four 12-hour charts. And they’ve netted a 2.6% return, half-percent risk.

7 closed trades and a 7% account gain this week

Put all that together, I’ve actually got only four, five, six, seven closed trades, two still in, but I’ve made a 7% account gain.

So it just shows that if you were only focusing on, let’s say 15-minute charts, with my strategy this week, you may or may not have found very many. I haven’t really looked because I’ve not seen much happening on the four-hour charts and lower that’s good for my strategy, but let’s say there were very few good setups. You may have had a slight gain. You might have a neutral week or even a loss. But when you have the ability, with your strategy, assuming your strategy’s built this way and with price action, things that we look for, you can trade it on any market on any timeframe.

But with that ability to do that, I can select what timeframe charts are showing me the best setups, the best signals, at that time and in real time.

Things will be different next week. Be flexible

Now next week, for example, there may be hardly any on the 12-hour charts that are good setups. I might be more focused on six-hour charts or four-hour charts or even one-hour charts. Who knows? And I have to sort of be prepared to be flexible in my trading approach. And that’s one of the keys that you can take out of this is don’t just trade one pair. Don’t just trade one timeframe chart. Don’t trade with fixed stop loss or profit target, because the market’s always moving. What might be a, as an example, a 50-pip stop loss might have been perfect for your strategy last week. For this week, that may be way too far away or way too close, depending on the volatility and the movement in the market. And also depending on the timeframe chart and the pair you’re trading.

So that’s why that I use Fibs because Fibs are all proportional to what’s happening in the market right now.

Examples of using Fib levels

A daily chart candle, for example, might be 200 pips this week. Last week, when there was huge volatility or the week before, it might have been a three, 400-pip candle. Next week, it might be an 80-pip candle on the daily chart. So you’ve got to be flexible and adapt with the market.

So I hope that helps, but yeah, really, if you’re in a bit of a losing rut, stick through it. Accept that if your strategy has been good in the past, likely you’ll get through it. And this will just be like a losing week or losing month, which is part of trading. You have to accept it. But yeah, multiple timeframe charts, low risk for trade, high reward-to-risk trades. When you get a profitable trade, make sure it makes really good profit and it outperforms a series of losing trades. That can really help you as well.

So once again, this is Andrew Mitchem here at The Forex Trading Coach. I’ll see you this time next week with more trading news and information. Bye for now.

Episode Title: #366: How to manage a run of losing trades


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