Forex: Why Losing is Okay

Filed under: Learn Forex Trading |

It seems we are programmed to win and to feel disappointment whenever we lose. There is an old saying: “It doesn’t matter whether you win or lose, but how you play the game”. This, I believe, refers to if you play the game in the right way with the right strategy, then in the short term, you could be unlucky, but in the long term, you will be successful. This is particularly apt when trading the forex markets. In the short term, really, anything can happen; but over a long series of trades, if you stick to a methodology that has an edge in the market – then you should be successful.

 

Most people, especially beginner traders, get really disheartened when they have a losing trade. This is especially true if it involves real money. I mean, who like losing $100 or more? However, losing is okay when trading forex, and I will explain why.

 

If you had a 30% success rate with you trades, would you be happy? Would you be happy with a 40% success rate? Most people would answer “no”. But this can be okay – more than okay, if your risk-reward levels are favourable.

 

For example, if you have a risk-reward ratio of 1:3 on each trade (with a risk level of 1% of your bank on each trade), and a success rate of 30%, then over a series of 100 trades, you would make a profit of 20% on your bank! This would make you extremely successful, and all with a winning percentage rate of 30%. This means that for every ten trades that you make, seven of them would be losers. This might be hard to take at first, but if you are profitable over the long run, then it is something that you need to learn to deal with.

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