Our day being good or bad depends on whether things happen in our favour or not. There are good and bad days in any profession or business and forex trading is not an exception. Read More
Now, what can you do about it? And how to deal with it? In this article, I will be sharing some tips to deal with a bad or difficult trading day like a pro and bounce back from it. As per Human Psychology, all of us have a negativity bias, which makes us focus more on the negative events and less on the positive ones. Some of us just go overboard with it and only see negativity around ignoring the positive, while some of us are more optimistic and try to see the good in everything. This negativity bias can also affect traders as they are more fixated on the losses and less on the wins. It is not rare to encounter several losses in a row and it is completely normal. Sometimes traders lose their first trade of the day and they fear the day will be ruined based on this single trade. Suppose, you entered a trade with the intention of catching 25 pips as profit and placed the take profit based on that. You also placed a stop loss at 10 pips loss. In the end, the trade hits your stop loss and you decide that it’s a bad trading day based on this. In this scenario, you can either complain about not making any profit or be relieved about keeping the losses to a minimum with the stop loss. Coming back to negativity bias; it is inherent in all humans due to our brain’s wiring. This wiring helped our ancestors to survive in the wild by being careful about life-threatening situations. But in the modern day, this instinct can do more harm than good as we take failures and setbacks as negative when in reality we are not as unsuccessful as we think. The learning curve can be a prolonged one for some beginners but that does not mean that you aren’t making any progress. The voice in your head that is asking you to give up is just the negativity bias and recognising this is important to deal with the difficult trading days and move forward without beating yourself up or doubting your abilities. A losing streak doesn’t make you a loser as long as you are able to slow down and analyse the situation to figure out what went wrong and correct it in your next attempt. The next tip to deal with a difficult trading day is developing and embracing a growth mindset. A growth mindset is about recovering from the negativity bias and being resilient to setbacks and failures while being determined to improve and grow beyond these limitations. A growth mindset can be a trait that some of us are born with but most of us have a fixed mindset which stops us from reaching our true potential not just in forex trading but also in life. Your profitability as a trader depends on your trading decisions and when you encounter loss, you need to realise that it happened as a result of your own decisions. A trader with a fixed mindset will feel disappointed and become emotional about it. However, a trader with a growth mindset will see the same situation differently as they will try to reflect on their decisions, analyse where they went wrong and take it as a lesson in their trading journey. For instance, if you see that your account performance is constantly dropping and you encounter frequent losses with bad trading days happening very often, it is time to review your trading system and evaluate the strategy. You can quickly assess the profit potential of your trades with a us30 profit calculator and compare the actual results to detect any deviation. After that, you can start revising your strategy for better results. Sometimes, you will realise that you need to upgrade your skills and gain more knowledge for dealing with difficult market situations. Some traders are able to make profits in any market situation as they have enough expertise and experience. Hence, you should also strive to enhance your knowledge and skills by spending enough time to study and practice. Traders who follow this approach will be able to overcome any challenge and a bad trading day won’t stop them from growing. One mistake that many traders make is deviating from their plan or strategy and sometimes this happens because they didn’t have a clearly defined strategy to begin with. Many beginners start without a definite plan as they think they can figure it out eventually. But not having a proper plan or not following your plan is the worst mistake you can make in the forex market. Having a solid plan gives you a sense of direction and ensures that your decisions are driven by logic and reasoning. Your analysis, entry point, exit point, risk level etc. should be clearly stated in the strategy. Many reasons make traders deviate from their strategy and one of them is lack of discipline. You can make some changes to your plan as and when needed to adapt to the market situation. But switching from one strategy to another without any valid reason needs to be avoided. You need to make sure the trades you enter are in line with your plan and make sense. Risk management is another aspect to consider for optimising your trading performance. To properly manage risk, you must define the capital you want to risk per trade. If you trade multiple currency pairs, then it would be difficult for you to define a certain amount of capital due to differences in the conversion rates. To simplify things, you can use a currency calculator, which helps with the conversion process of one currency into another and helps you know the capital you should use per trade. You should not give up on your strategy just because of a bad trading day or a bad trading week. Just see what you can do to refine it and identify the shortcomings of your trading system. Most of the time, the bad trading days are temporary and you will be able to recover the losses by following a cautious approach. Successful traders will tell you about the importance of sticking to your plan and being consistent. The last but most important tip to deal with bad trading days is learning about trading psychology. Many traders who encounter bad trading days end up overtrading after a losing streak and this only adds up to the losses. Trading decisions made under the influence of our emotions will never yield good results in the end. This is why it is important to learn about trading psychology as it teaches us about the impact of our emotions on trading. Because emotional bias can be a fatal flaw for a trader. When you know that you are tempted to take another trade due to greed or FOMO (Fear of missing out), you are less likely to take that action as you know that you are just being emotional. Trading psychology is all about managing your emotions in a way that you are not overpowered by them and remain rational while making trading decisions. The excitement of trading can also make a trader impulsive and they make decisions that they regret later on. It is impossible not to feel any of these emotions when real money is at risk but you can train your mind to process these emotions in a better way. Practising mindfulness and meditation can calm your mind after a stressful trading day. Otherwise, these negative emotions will stop you from attaining your goals as a professional approach is very much needed to deal with the difficult situations that you come across in trading. Summing Up To sum it up, dealing with a bad trading day can be hard especially when you are a beginner with little to no experience in the constantly fluctuating forex market. The best approach here is taking a break and analysing the situation to see what you can do to not repeat the same mistakes in future. It is normal to feel emotional and some traders even experience burnout when they fail to attain their targets after dedicating hours to finding the ideal trade setups. But you should embrace the growth mindset and let go of the limiting beliefs.
Tips To Deal With A Bad Trading Day As A Forex Trader
Our day being good or bad depends on whether things happen in our favour or not. There are good and bad days in any profession or business and forex trading is not an exception. Read More