Losing Faith in Your System: A Periodic Problem

Filed under: Learn Forex Trading |

Screen shot 2013-03-25 at 10.30.30Honestly, it happens to the best of us. Even for those at the very top of their game, everyone loses faith with some aspect of their system from time to time. Football managers tinker with their formation and strategy, fund managers chop and change the companies that they buy shares in, and marketers change their advertising campaigns, thinking that they might be taking the wrong approach. And it is the same in the world of forex trading. Traders get carried away when things are going well and think they are invincible, but when they hit a sticky patch, they inevitably begin to doubt their trading system or methodology, and the weaker of these species will start to tinker with their system, and make some changes.

 

I too have recently hit a sticky patch with my trading. After a +6% gain in January, I then hit a -6% loss in February, followed by a -1% loss so far in March, giving an overall -1% loss for the year to date. Not great by any means – but also not a disaster. Trading profits tend to come in spurts, and if, for example, the first and third quarters of the year are breakeven, and the second and fourth quarters of the years result in 15% gains, then overall that would be a 30% gain for the year and a very satisfying result.

 

However, for most people, 30% gains are just not good enough. If you only have a bank of say, $2000, then a 30% gain accounts to just $600 per year. Not a kick in the teeth by any means, but for many, not enough motivation for the hours of study and research that it will take to reach this level of performance. Therefore, many continue to look for the Holy Grail and the 100%+ profits per year; and while this is not impossible, it would be very, very difficult.

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