You might be one of those, in a day job, paying meager wage. On the quest to turn your fortune, you stumble upon forex trading. You use the meager savings made out of meager wages to open a forex account. Thanks to the internet, which can satiate your longings for free signals and news for forex trading. But it won’t be rewarding consistently as per your expectation. As a result, your capital starts to dissipate. The lost amount means a great deal to you and you might be thinking…
You understand that news alone is not for making profits in trading. Like every retail trader, you resort to technical analysis and try to make the most out of default indicators. You enter a trade trusting an indicator, say RSI, but it leaves you high and dry by repainting its signal. Now you will encounter the greatest predicament every trader goes through – ‘Whether to close the trade with a small loss or wait for it to move towards a profit.’ But, as you think, the market plunges to your stop loss. Now you will definitely be wondering…
By now, you would have realized indicators are not the messiah of trading. So now you move on to candlestick patterns or use two or more indicators to confirm a trade or even a combination of candlestick pattern and an indicator. It starts to pay off initially and make you feel confident that you have found the perfect formula for success. You start recovering your loss slowly, which frustrates you like hell. You might question the market’s hypocrisy – loose in a short span, but to endure a lot of time to get it back. That’s when you come across an attractive opportunity.
SHORT TRADE INITIATED
An asset in an overbought zone with overstretched RSI. A bearish engulfing candle then follows. That’s the nail in the coffin. Given the opportunity, even a Buddhist monk would be tempted. So why not you. You decide to go for the kill; recover all your loss in one go. You put an anxious high volume order with trembling hands and overwhelmed emotions, out of the ordinary and (fair to say) out of your skin, but with a tight stop just above the last made high. As you keep your fingers crossed, the market finds resistance which adds to your hope. But, the market makes a sudden impulsive move and hits your stop loss. All your dreams shattered and thrown out of the window in a minute. But what follows is going to devastate you. Unable to sustain above the peak, it plunges and starts its downward journey. Eventually, it reaches your expected target. You will be left with awe and at last, the words tumble out of your mouth, ”Why does this always happen to me?”
The emotions which follow will be overwhelming and devastating. You will be annoyed, enraged at trading. Some, even annul their relationship with the market while others lose more on emotional over-trading, in the hope of getting back. But what most traders fail to understand is that it happens day in day out in trading and to everyone involved in the market, at the initial stage. Maybe the delicacies and intricacies might differ, but the ordeal remains the same. As a beginner, you have to endure these turmoils to taste success. But you can mitigate the collateral damage if you follow the following mind hacks.
Pay less Get more
Every trader losses money and capital at their initial stage. It’s just what we professionals term as the tuition fees one has to pay to get admitted to ‘Forex university.’ There is no trick to bypass this stage magically. But what you need to do is ‘pay less, get more.’ Put in a belittle investment which you can afford to lose and get the maximum knowledge out of it. Even if you have had a good demo trading experience, don’t set aside this rule. Demo trading is entirely different than the live one, as it does not involve emotions.
A trading journal or diary
Journalize your experience down to the tee. Go through the journal on the weekends. The lessons give greater insight to you than the books and blogs. At this point, it is better to prioritize on the experience than the profits and loss in the loss. Hence it is better to review than to evaluate your journal at this stage.
Spot your strength & weakness
Identifying your core strengths and weakness in trading is imperative. Some excel in short-term trading while others in long-term trading. You might like long-term trading instead you will find success on scalping or short-term trades. It is best to go with the flow of the market and nurture your skills as you go. Having success forefront is important. Once your account is loaded with profits, you can try out different things and even turn a weakness into strengths.