How to Adjust Your Mindset When Trading Losses? 6 Experiences of Foreign Exchange Experts

We all know that the foreign exchange market is a zero-sum market. Unlike commercial cooperation, foreign exchange transactions can achieve mutual benefit.foreign exchange marketBoth buyers and sellers are competitors. One side makes money, and the other side must lose money. Some people make money and some people lose money. So, how to adjust the mentality when there is a loss in foreign exchange trading? This is a question that investors must understand, and it is very crucial for any foreign exchange trader.

Here are some tips on how to adjust your mindset when you lose money in foreign exchange trading, for all friends who are engaged in foreign exchange trading.

First, lower your expectations, hope for the best, and prepare for the worst

Each of us has our own expectations before doing something. The same is true of foreign exchange transactions. Before or during the transaction, we are painting our future, hoping that this transaction will make a lot of money, and we are all full of expectations.

However, once you encounter a loss, there will be a great contrast in your heart, just like my friendDepu Foreign ExchangeWhen trading on the platform, he always hopes to make up for the loss of the previous trade by making a profit on the next trade. Then he places an order in a hurry, and the result of placing an order in a hurry is not only no profit, but also repeated losses, so the mentality is extremely easy to collapse.

Therefore, lowering one's expectations is very crucial. Once expectations are lowered, even if there is a loss, it will not be a big mess, and sometimes they will make a lot of money because they lower their expectations.

Second, avoid amplifying your own psychological feelings

When we lose a trade, we often experience anxiety. What should we do if we are afraid of losing again? What should we do if we are afraid of not making money? It will habitually exaggerate and catastrophe our losses.

For example, we lost $1,000 in the course of trading, but often my actual experience will be greater than the loss of $1,000, which is twice or even more than our actual loss, and we humans are precisely this kind of animal that cares about gains and losses.

Therefore, I suggest that when we are losing money in trading, we must ask ourselves the following two questions.

What did I lose in this transaction?

2. What specific impact does this have on my life?

In fact, for the vast majority of us investors, a loss of $1,000 has no impact on our lives. It may be to buy less clothes and eat less big meals. Don't think too much, change to eat and drink, the world remains the same.

Therefore, in the case of loss, it is important to avoid amplifying your feelings.

Third, don't care too much about the winning rate of the transaction

Sophisticated foreign exchange traders should not pay too much attention to accuracy, because what really helps you make a profit in trading is not the winning rate (even the top traders on Wall Street, according to past statistics, their winning rate is only 30 or 40%, and it is rare to exceed 50%). Therefore, stop loss should be a normal thing for traders, and it even occurs more frequently than the opportunity to make a profit.

Fourth, don't rush to reverse when trading losses

When trading losses occur, many foreign exchange traders start to panic, rush to turn around, and start frequent and impulsive trading. At this time, you must restrain your inner impulses, and wait until the mood is calm and the market is more accurate before making a move. If investors do not know how to adjust their mentality in the face of foreign exchange losses, do not make any trading decisions at this time. You would rather miss the market than enter the market blindly, trade cautiously, and reserve more time and measures for yourself to prevent risks. Only by stabilizing your mentality can you have a chance to become a good player in the foreign exchange market.

If you can't afford to lose when the market needs you to, then the market will make you lose even more!

We are talking about what happened after the stop loss, so it is obvious that you have been in a position squaring at this time, and the loss is already a given. Originally, all this was the best ending, because although the loss was at least controlled. But some traders don't think so, they think about how to make back what they lost as soon as possible, and thus, Pandora's magic box is officially opened: chasing orders, heavy positions, frequent trading, dead fighting, until the last bullet is exhausted. I don't know which ones you have experienced, but in my early days, I have experienced them all, and after being taught by the market, when I fell into a "pool of blood" and was dying, I suddenly realized that this didn't have to happen.

If you have had a similar experience, then this is my other advice: After you stop losing, you must recognize the loss and never think of taking it back from the market at the first time. Otherwise, you will no longer be yourself and your account will soon become unaccounted for.

What has caused many foreign exchange traders' accounts to be wiped out is not the loss itself, but the impulsive trading that begins to rush to reverse after the loss occurs, at which moment the risk really begins to come.

Remember that trading is a marathon, not a lifetime deal

In fact, we will encounter many difficulties in our lives. From childhood to adulthood, we may face: failure in the college entrance examination, loss of love, career failure, etc. These setbacks we have encountered must have felt that disaster was imminent and the world was coming to an end, but in fact we have all survived one by one and are still alive and well, aren't we?

Thinking about these things compared to the current short-term trading failure, you will find that the current loss is nothing special. Foreign exchange trading is not a sprint, but a marathon. As long as you adjust your mindset in time, grasp the trading ideas and trading rhythm, the loss is only short-lived, and you must have this confidence.

Six, stop loss basis is not equal to reversal basis, do not easily change the original judgment

In most cases, the reason why traders stop losses should be because the original position reason has been destroyed (the structure has been broken, the indicator signal has disappeared, etc.), and this time it is undoubtedly a wise choice to stop losses. When the current position reason is destroyed, some traders will simultaneously understand it as the basis for the market reversal, but in fact it is two different things.

Therefore, after the current position stop loss, traders need to reassess the logic of price fluctuations and provide a new basis for future trading. If they determine that there is indeed a reason for the reversal operation, it is not too late to enter the market again, rather than copying the reason for the stop loss and easily changing their original position.