Take your time, perfect your trading system, and transition to a live trading account when you are ready!
Think Small (For Now)
Key takeaway #3
After a significant loss, revert back to trading with small amounts, and build your way back up to the larger amounts. Focus on improving your trading performance.
Continuing with the idea of reverting backwards, after you have made your transition back to live trading, it's probably not very sensible to jump straight back into the high risk trades that you made your losses on.
So instead, think small! Make some smaller trades and focus on improving your trading performance. Try not to concern yourself with making larger profits until you've spent an adequate amount of time strengthening or improving your trading strategy or system first.
It likely won't take much time before you're back to your winning ways and ready to take on the bigger trades once again. But this time, you won't make the same mistake twice, and you will be approaching the riskier trades with a better, more refined approach.
Don't Play The Blame Game - Take Responsibility!
Key takeaway #4
Take ownership of your losses. Focus on trying to understand what went right, and what went wrong. Prepare for all possible outcomes.
This isn't just a good ethos for trading, but rather, an excellent one to have for life in general. Often in life, when we look at a situation objectively, we can see that everything is in our hands. Perhaps we were at fault, perhaps not, but it's important to understand why things go wrong, and what we can do to change them in the future.
Don't allow your emotions to cloud your judgment when you make a bad trading decision, or if trades aren't going your way. Try to understand what went wrong first, and then start planning how you will avoid this in the future.
It's also important to remember that while you should take responsibility for your mistakes and not blame other people or external factors, sometimes it genuinely isn't your fault, and could be due to factors that are simply out of your control. Once again, by understanding why things went wrong, you will arrive at this conclusion by yourself.
- Your WIFI could suddenly stop working
- The markets could suddenly start fluctuating in an undesirable direction
Whatever the issue is, try to see how you can prepare for this in the future. By having backup plans, you will have a strategy to fall back on if your initial strategy doesn't work out.
Take action by doing things such as having backup internet (e.g. through your mobile data, or by using a nearby WIFI hotspot) encase your WIFI fails, or by reapplying your stop loss (you could use a trailing stop, and continually move it according to how the markets change).
Maintain Records & Analyse Everything
Key takeaway #5
Keep records of your trades - both good and bad. Analyse this information to better understand why you're winning or losing, so that you can replicate or avoid this in the future.
To predict the future, we must look to the past for answers. By maintaining records of all of your trading experiences, you can track your trading performance over time, to understand why things worked, and why things didn't work.
Often when we get frustrated in life, one of the first things that starts to frustrate us is not knowing why things didn't work out. By keeping records of successful trades and unsuccessful trades, you'll always have something to refer to.
So, if you experience a particularly frustrating trading day, you can always look at your records and understand why things occurred in a certain way.
Maintaining trading records will also help you to understand whether or not to drop a particular strategy, or it might indicate that you need to switch your trading system with something more befitting.
Don't Overtake Your Loss - Dream On!
Key takeaway #6
Always keep your biggest loss in mind when making the big trades. Promise yourself that you won't overtake this amount.
Unless you're prepared and have measured the risk to your capital, try to always keep in mind your biggest loss and don't overtake it. This loss is most likely to occur as a result of a 'revenge trade', so make sure that when you have a bad trading day, keep in mind your worse trading result to date, and then draw that particular trading session to a close.
After all, the minute you stop following your strategy and start obsessing over winning your money back, is the day you might unintentionally make your worst trading loss. Losses are simply a part of trading and will occur from time to time, so make sure that you don't incur losses because of your emotions and your failure to control them. Actually, you can read this material about using stop loss, to check if you use it right.
It might seem a little obvious, but by following all of these steps, you'll be in the best mindset possible to avoid trading frustration. The best way to avoid frustration is to seek answers, and to take action.
Don't get lost in your emotions and let them guide your behaviour, but instead, work on your trading system, your trading strategies, your sources of information, trading tools, and everything else in between. Put the time into understanding why things work, and why they don't work.
Above all else, don't be too hard on yourself. Making losses is just a part of the game. But you're in control, and you have more power over what you can control than you may realize. Take the time out and do the work.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.