How To Handle A String Of Losses -

Home
>
Currency Trading
>
How To Handle A String Of Losses

How To Handle A String Of Losses

Everybody hates to lose and unfortunately no one is blessed with the ability of foresight, therefore losses are an unavoidable part of trading. When we enter a trade we will either be right, or wrong, and even if we broke-even we'd still be classed as being wrong - as nobody enters into a trade just to break-even! When unsuccessful traders encounter a string of losses they begin to engage in self-destructive patterns that help them escape the pain they are experiencing.

In this article we bring to light these self-destructive actions that can help you realize what you are doing before it takes hold of your physical health. If you find yourself already engaged in these patterns hopefully this article can help you to get you back on track as quickly as possible.

The Destructive Patterns

If you find yourself caught in a string of losses or a bad performing week/month be sure to monitor your behavior. It is during this time that you will be at your most vulnerable. You will begin to indulge in activities that at first seem harmless, but upon excessive use (or in time), begin to cause physical damage to your health.

Ask yourself the following question: during during drawdown periods do I find myself over-indulging in these activities:

> Food (especially junk food - eg. chocolate, ice-cream, chips)?

> Sex (includes viewing pornography)?

> Alcohol?

> Drugs (includes excessive smoking)?

> Laziness (find it difficult to wake up in the morning)?

> Entertainment?

All of the above taken in excessive doses can be detrimental to your own physical health (some even in small doses!).

These activities above during your losing period are only covering up the pain of confronting the true issue, and your body tries to rid the emotional pain by trying to "fix" it with physical pleasures. Unfortunately it is going about it in the wrong way, so what should you do?

Firstly... REALIZE WHAT YOU ARE DOING AND STOP IT!

You need to realize what you're doing and you need to STOP doing it immediately! You can either decide to stop, or you'll be forced to stop when your body eventually breaks down and prevents you from any form of movement. It will be much more beneficial to you in the long-term if you can decide to stop *NOW*.

Once you have stopped you now need to figure out a way to solve the pain - not by cutting out or neglecting it, but by staring it in the face. Bring your problems out into the light, be honest with yourself. There can be no growth without pain, you are experiencing the emotional pain, now it is time to find the error and therefore your growth.

Begin Your Review

The review process begins in two separate areas: You & Your System. Here are some checklists for you to go through to find out where the problem could lie:

"YOUR SYSTEM" CHECKLIST

> Was your system thoroughly tested prior to trading it (or paper traded if you do not have the capacity to programme your system into backtesting software)?

> Did you test with out-of-sample data?

> Do you even have a system???? If you do not, how do you even know if the method that you are trading is even profitable??

> Is your system's code correct?

> Did you over-optimize your system? (what have we discussed about over-indulging?)

> Did you paper trade your system prior to placing capital on it?

> Did you trade with a small amount of capital prior to placing the rest of your funds on it?

> Do you know the system's limitations?

> Did you properly drill your system? (see our blog article on why I am the system designer from hell)

"YOU" CHECKLIST

> Is the current drawdown you are exhibiting with your system normal?

> Are you comfortable with your system's historical drawdown performance?

> Are you fully aware of the risks involved with your system and the instrument(s) you are trading?

> Are you trading with funds that you are comfortable risking?

> Are you relying too heavily on your performance?

> Have you set realistic goals?

As you can see there are generally two areas that you need to explore: the mechanical aspect - your system - and the emotional aspect - you. Both can be responsible for making the way you feel the way you do. It will either be an error on the system's side with how the system was tested and/or programmed, or it can be your own psychological profile not being comfortable with the system's performance.

Your Answers = Change = Your Growth

What steps should we now take? Now that we have begun a corrective process where we have stopped the evil nature of our over-indulging ways to take control we should continue our "corrective nature" by invoking our findings and taking ACTION in correcting our errors.

If the problem was mechanical - fix it, if the problem was emotional either go about setting up new thought patterns, or change your current system. The answers lie in whether you need to expand your knowledge in system development, or whether you need to grow emotionally as a person.

Unfortunately there is no easy road, and even if there was everybody would be doing it. Hopefully this article has made you ponder over some of your behaviors during drawdown periods, be sure to keep an eye on yourself and as always take care of your body, because there's no use in making all the money in the world when you don't have the physical capacity to enjoy it.

Ryan Sheehy is the author of http://www.currencysecrets.com where you will find more free articles and resources on forex trading. You can also subscribe for free to their monthly newsletter.

In The News:

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.dailyfx.com/story/strategy_pieces/weekly_range/Currency_Trading_Signals_Prove_Accurate_1223906743418.htmlcid=1257472398ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNG3wq3_9fhh9Hj5JWyZ1ROpaQ1PJAbCurrency Trading/b Signals Prove Accurate on Strong Market Volatility/abrfont size=-1font color=#6f6f6fDaily FX,nbsp;NYnbsp;-/font nobr13 hours ago/nobr/fontbrfont size=-1b.../b Our breakout and momentum-oriented btrading/b strategies continue to outperform through recent trade, and extremely elevated levels of bcurrency/b optionsâ€™ b.../b/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.dailyfx.com/story/market_alerts/technical_alert/Automated_Trading_Signals_Say_Yen_1223946473159.htmlcid=1257472398ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNHZpr6gZkSpolUFnZfAsXeMh6iyCQAutomated bTrading/b Signals Say Yen Is a Steal, But Volatility May b.../b/a font size=-1 color=#6f6f6fnobrDaily FX/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1257472398hl=ennobrall 2 news articles/nobr/a/font/div/font/td/tr/table

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.rte.ie/business/2008/1006/euro.htmlcid=1254889944ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNHT0oZsWIY3io8RqCLn7n0EyUo6_Qimg src=http://news.google.com/news?imgefp=WeTN4ck4Yv0Jimgurl=dynimg.rte.ie/00019d1010dr.jpg width=80 height=60 alt= border=1brfont size=-2RTE.ie/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://money.cnn.com/2008/10/13/markets/dollar/%3Fpostversion%3D2008101315cid=1254889944ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNEZ4hmoc8H_35ndDQcDN98qDPkqVwDollar slips vs. euro, pound/abrfont size=-1font color=#6f6f6fCNNMoney.comnbsp;-/font nobr8 hours ago/nobr/fontbrfont size=-1And the dollar jumped against Japan#39;s bcurrency/b, buying Â¥101.11 from Â¥100.51. bTrading/b in bcurrency/b markets was light Monday as many US banks were closed in b.../b/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.forexhound.com/article.cfm%3FarticleID%3D114162cid=1254889944ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNFbtdRy9NBbNBx8XQr79O5r6Ex1OgDaily Market Update by D. Jobman, Tradingeducation.com, LLC/a font size=-1 color=#6f6f6fnobrForex Hound/nobr/font/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.bloomberg.com/apps/news%3Fpid%3D20601081%26sid%3Da0jKwOOZ5DEA%26refer%3Daustraliacid=1254889944ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNHcR-ypTnUJtlt2bPaw5nRPh-mymgAustralian Dollar Posts Record Two-Day Gain on Global Rescues/a font size=-1 color=#6f6f6fnobrBloomberg/nobr/font/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.currencyconverter.co.uk/news/2008/weekly/0017currencynewsoct06oct122008.htmlcid=1254889944ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNFGeQCMc-8LynTROcec-a00rC9HEgSummary Of bCurrency/b Markets For October 6th â€“ October 12th/a font size=-1 color=#6f6f6fnobrCurrencyConverter.co.uk/nobr/font/fontbrfont size=-1 class=pa href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.guardian.co.uk/business/feedarticle/7859415cid=1254889944ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNGE9OXID9TAqFXNt-OdD4m78dQrQgnobrguardian.co.uk/nobr/anbsp;- a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.bloomberg.com/apps/news%3Fpid%3D20601081%26sid%3DaUQbxmfhNung%26refer%3Daustraliacid=1254889944ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNFAqycHSlnAuos7uPt9GZ9ckrBaBQnobrBloomberg/nobr/a/fontbr/font class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1254889944hl=ennobrall 581 news articles/nobr/a/font/div/font/td/tr/table

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://blogs.wsj.com/marketbeat/2008/10/07/icelands-frozen-banking-sector/cid=1256870677ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNELvXzNUPLbNiakxKWf3bdHsj01FQimg src=http://news.google.com/news?imgefp=zwPNP2Hp2HcJimgurl=s.wsj.net/media/krona_auto_lg_20081007102343.jpg width=80 height=38 alt= border=1brfont size=-2Wall Street Journal Blogs/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.bloomberg.com/apps/news%3Fpid%3D20601085%26sid%3Daiz5QIq94nrw%26refer%3Deuropecid=1256870677ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNExX3AruNy7jfHqoagV2L25mqRX3wIceland#39;s Krona bCurrency Trading/b Halts as Kaupthing Taken Over/abrfont size=-1font color=#6f6f6fBloombergnbsp;-/font nobrOct 9, 2008/nobr/fontbrfont size=-1b.../b a bcurrency/b analyst in Frankfurt at Commerzbank AG, Germany#39;s second-largest lender. The krona plummeted to 350 per euro this week in btrading/b between b.../b/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://blogs.wsj.com/marketbeat/2008/10/08/shortest-currency-peg-ever/cid=1256870677ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNF44h5YLB8kqoaCvYe90yZO8Wab4gShortest. bCurrency/b Peg. Ever./a font size=-1 color=#6f6f6fnobrWall Street Journal Blogs/nobr/font/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://blogs.wsj.com/marketbeat/2008/10/07/icelands-frozen-banking-sector/cid=1256870677ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNELvXzNUPLbNiakxKWf3bdHsj01FQIcelandâ€™s Frozen Banking Sector/a font size=-1 color=#6f6f6fnobrWall Street Journal Blogs/nobr/font/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.bloomberg.com/apps/news%3Fpid%3D20601085%26sid%3DabjzC1zbw8VI%26refer%3Deuropecid=1256870677ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNHw3QJ5_Tnef_PpFot32w9o82VkFgIceland#39;s Krona Quoted 95 Percent Below Peg; Regulator Steps in/a font size=-1 color=#6f6f6fnobrBloomberg/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1256870677hl=ennobrall 12 news articles/nobr/a/font/div/font/td/tr/table

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.cnbc.com/id/27152917cid=1257478029ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNF1gJbR7sF9pmbxgr6n1hyOl3UcJwimg src=http://news.google.com/news?imgefp=xY5SbnQOxr0Jimgurl=media.cnbc.com/i/CNBC/Sections/News_And_Analysis/__Story_Inserts/graphics/__CURRENCY/dollar_yen_1.jpg width=80 height=60 alt= border=1brfont size=-2CNBC/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.guardian.co.uk/business/feedarticle/7860415cid=1257478029ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNHASQz2G1-Kd8JAfygkqC7hgOa4Fg* Yen slips, Aussie jumps on bank rescue plan hopes/abrfont size=-1font color=#6f6f6fguardian.co.uk,nbsp;UKnbsp;-/font nobr22 hours ago/nobr/fontbrfont size=-1quot;I don#39;t think we#39;re out the woods,quot; said Gerrard Katz, head of North Asia bcurrency trading/b at Standard Chartered in Hong Kong. quot;It#39;s a very fragile bounce b.../b/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.reuters.com/article/marketsNews/idUSSP35797720081013cid=1257478029ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNEnroxdcyG8BU4AfaiYDLmzLnZ3HARPT-FOREX-Yen falls, Aussie surges as bank rescues take shape/a font size=-1 color=#6f6f6fnobrReuters/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1257478029hl=ennobrall 26 news articles/nobr/a/font/div/font/td/tr/table

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.washingtonpost.com/wp-dyn/content/article/2008/10/09/AR2008100900352.htmlcid=1257463299ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNEUqCzWXq3ISt3Z439Bgf80vg9_5wimg src=http://news.google.com/news?imgefp=TKeRHZzkY1YJimgurl=media3.washingtonpost.com/wp-dyn/content/photo/2008/10/09/PH2008100900353.jpg width=80 height=77 alt= border=1brfont size=-2Washington Post/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.dailyreckoning.com/Writers/Butler/Articles/101308.htmlcid=1257463299ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNFesU8Arxc9rwV63X1xuHpDn4EBegThe Fed Floods the Markets with US Dollars/abrfont size=-1font color=#6f6f6fDaily Reckoning - American Edition,nbsp;MDnbsp;-/font nobr6 hours ago/nobr/fontbrfont size=-1bTrading/b in Iceland#39;s krona all but dried up last wee as the country#39;s banks collapsed, sending the bcurrency#39;s/b bid/ask spreads skyrocketing. b.../b/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.rttnews.com/Content/AsianMtUpdates.aspx%3FNode%3DB3%26Id%3D739119cid=1257463299ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNHAWzBYcwiesh8AmYjl8xTv-f5nAgAsian markets rebound on bank rescue plans - Asian commentary/a font size=-1 color=#6f6f6fnobrRTT News/nobr/font/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://allafrica.com/stories/200810131096.htmlcid=1257463299ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNH77YPOjDi6EebN_xXpNUwtZRmMwANigeria: How Safe Are Country#39;s External Reserves?/a font size=-1 color=#6f6f6fnobrAllAfrica.com/nobr/font/fontbrfont size=-1a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.mw.ua/2000/2040/64321/cid=1257463299ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNHC-7si5FJnfIfT-Z4UPSSNHqdBLQAnatoliy SHAPOVALOV: â€œThe issue is not about the devaluation of b.../b/a font size=-1 color=#6f6f6fnobrMirror Weekly (Zerkalo nedeli)/nobr/font/fontbrfont size=-1 class=pa href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://news.xinhuanet.com/english/2008-10/14/content_10189800.htmcid=1257463299ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNEzEpHlgBZYJmQH2vBOvPNGS0ynoAnobrXinhua/nobr/anbsp;- a href=http://www.citywebshopper.net/articles/includes/redirect.php?url=http://www.ibtimes.com/articles/20081013/u-s-dollar-falls-as-european-central-banks-conduct-dollar-auctions.htmcid=1257463299ei=xxD0SKm8BILg6AO7h5SaDQusg=AFQjCNFhwKpZOOdkaDkrMbl-zaLeUE5crAnobrInternational Business Times/nobr/a/fontbr/font class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1257463299hl=ennobrall 745 news articles/nobr/a/font/div/font/td/tr/table

currency trading - Google News