If you plan into becoming a full-time trader, you are going to lose trades and money at some point.The internet is full of SCAM articles, strategies and indicators that promise you the Holy-grail trading system that will give you a stunning 75%-95% win rate, but you should really forget about all that right now, as there is no such thing!
As bad as it may sound, losing is really a part of winning as a trader, lossing and winning are 2 inseparable when it comes to trading.Before you can win as a trader and make consistent money/profits, you first need to learn how to lose properly.
The hard reality … ALL pro traders lose money and they all understand it’s just a part of the trading game.Sadly, as the internet is full of lies/scams that promise you high winning rate strategies, most traders don’t really get that there will be losses and every trade will be accompanied by the FEAR of losing money and high doses of emotions.
Those are top 3 key reasons why traders are afraid of losing trades :
1.They don’t understand that mathematically, a trader can lose 50% or more of the trades, but still can overcome the losses with the profit trades, making the win ratio bigger than the loss ratio.
2. In general, they are afraid of losing.In real life, you can never be a winner if you are afraid of losing, it’s part of every great man in this world, including successfull business men, sportsmen etc.
3.Most beginner traders are risking more per trade then they can really afford to lose, being the major cause of fear, sleepless nights and huge emotional swings. This is why we have to keep our risk low, and never risk more than we can accept to lose in one trade.
In the upcoming of this article we are going to learn how to conquer the fear of losing trades.I recommend you to book-mark this article and come back and re-read it everytime you need to as this article will help you develop into a confident and sucessful trader.
We need to transform the focus of the fear of losing money.
Human’s instinct is to protect their acquired wealth and properties as they have worked hard for it.If humans wouldn’t have had this instinct there would be more chaos in the world and in the trading markets as well.
Hower, in trading, we need to transform this instinct and re-focuse it into a different mental state.
Instead of being afraid of losing our trades (and money) when we are trading, we need to embrace the control we have on each trade.All good traders have a good risk money management of position sizing, placing a stop loss and take profits.
The power of STOP LOSS TOOL
Instead of being afraid, we should keep in mind that we protect our trades with the STOP LOSS tool, and we should embrace the possibility that every trade could reach the STOP LOSS, and we can always adjust it per our risk appetite.This should give us the feeling of confidence because we can predetermine how much we are comfortable with potentially losing BEFORE we enter each trade.
1. Do I really have the mind set, knowledge and confidence to be trading with real money?
Always, before we start trading real money, we should always make sure we have the confidence of trading that ammount of money !Most of the beginner traders tend to invest A LOT more than they are comfortable of losing, they are trading their heard-earned money and they don’t have the 100% confidence of really being comfortable of trading that ammount of money.
If you don’t have this confidence yet, you probably should NOT be trading with real money!Most traders aren’t prepared to risk real money in the markets and yet they still do it, this is why they are overwhelmed by the fear of losing that money.
2.Am i trading a position size/leverage that is too big for my risk per trade tolerance ?
First of all, you need to figure out what your risk tolerance is.If you are not 100% comfortable with the ammount of dollars you can lose per each trade, don’t place that trade, because YES, every trade can be lost, and no trade is a 100% WIN, always remember that !
Always be honest with yourself here, take into account your overall financial situation and determine yourself how much money you can realistically risk for each trade you make.
Instead of trying to be a small-time guy who is trying to get lucky on each trade, you must have the mindset of a risk manager and of someone who is managing important funds.
3. Do I really understand the math behind trading?
With the “math behind trading” I am reffering to the risk reward ratio and how it will impact your winning percentage.If we look at the big picture, let’s say, for every 100 trades we will be losing at least 35%-45% of the trades, and sometimes even up to 50%-60% of the times.This means, that at every 100 trade we will be losing anywhere between 35-60 of the trades.But, applying a correct risk-reward ratio we can still be profitable even with 50% win rate, we will explain how this is possible next
Let’s take a look at an example with a risk/reward ratio of 1:2 and 10 trade made:
A 1:2 risk/reward ratio means that on each trade, we set our STOP LOSS at 1:2 of the TAKE PROFIT
For example, if our stop loss is at 10 pips, our take profit should be at 20 pips.
This way, if we made 10 trades and 6 of them have been lost, we would lose 60 pips in total (10 pips per trade multiplied by 6 trades)
The other 4 trades that we won, will give us 20 pips per trade multiplied by 4 equals a total of 80 pips !
In this case, we lost 60 pips but we won 80 even with a win rate of just 40%
This is why, losing money on a particular trade should not concern you.
We should always look at the big picture when we are trading, and do our math on long-term !
Always trust your math and strategy you follow
As we have demonstrated in the example above, the math shows that even if we lose 60% of the trades we can still be profitable if we manage to look at the big picture.The risk reward in this example was 1:2, but we can always adjust the risk reward ratio per our needs and still be profitable with it, the secret beeing that the overall wins will eventually cover the losses and still make some profits after that.
What is the Conclusion?
Almost all beginner traders are struggling with the fear of losing trades and they can get very emotional when it happens, and it ALWAYS HAPPENS.There is no way of getting around the losers, they are a natural part of trading, and it’s the only way you can reach the WINNER trades !
The only way you will ever become a successful trades is by overcoming the fear of losing money and trades.We have to accept this as a natural part of trading and we should stop looking for “holy-grail” systems as there really aren’t any! The markets are wild and only the brave can conquer them !
VorteXz Signals wishes you a happy and profitable trading !
Don’t forget to book-mark this article and re-read it everytime you feel like you need to !