Forex: The Highs and the Lows

Filed under: Learn Forex Trading |

Just a few days ago, we were up 9% for the month and going strong – everything was going along nicely and it felt like every trade we made was going to be a winner. Just a couple of day later, and we are now only up 2% after a string of seven losers in a row. We have quickly forgotten what winning feels like and it now feels as if every trade we take is going to lose. So how do we manage these moments of elation and the crushing defeats?

 

It is true that after a series of good results, I personally am more likely to overtrade and take setups that I might not after a string of defeats. This can lead to over-trading, as when you feel invincible, you are more likely to gamble as you are in a comfort zone as you have profits to play with. However, after a string of defeats, it is easy to sit on the fence, to protect what you have, and as such, you can actually miss out on some good profits. In this way, we can have a tendency to sabotage our own trading bank.

 

What we should be doing is trading in the same way, regardless of whether we are on a winning streak or a losing streak. We should take the best trade setups based on a refined trading methodology, and we should always look at the big picture. Every trade that we make on our live trades has around a 50-50 chance of success. With a positive risk-reward, this means that in the long run, we should be profitable. But in the short term, anything can happen. This is something that we must always keep in mind and strive to see that bigger picture.

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