Sophia Todorova has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens.
A few years ago a friend and mentor of mine said to me “I love to lose, because only then will I know that I am doing something wrong and need to change” After I heard this, I thought: Haha..Now I know his secret. You see, prior to this conversation, this trader seemed so fearless that I have to admit, I really envied him. He loves trading and approaches it like a game. He has his strategy, and he knows it works because he has done the necessary preparation. If he has a string of losing trades he would just keep going until he reached his maximum daily loss allowance. On the surface it would seem that he fails to take trading seriously. However that is not the case at all. He has prepared himself so well, has tested himself so many times, that he just relishes the challenge, and seeks to out-do himself time and again. He has excelled in a way that only comes from knowing there is nothing to fear from the market. And only after having done what may seem to be tedious preparation to the average trader, was he able to excel in this way. He spent five (5) years practice trading his before he attempted to risk money on the market,….That’s right..I said five years. I am in no way implying that every trader who wants to succeed should do this, but it shows the extent of his dedication, and the seriousness with which he approached trading.
The trader in the story above embodies what every trader yearns to attain, and the simple reason for his success is that he trades without the inhibiting, immobilizing fear that causes trading to remain but a dream for many others. So how can one become successful in trading by embracing losses? To answer this question, I will discuss what causes fear in the first place:
- Lack of preparation/ Ignorance: This is definitely a major contributor to fear. Every trader can attest to the fact that if they get into a trade without proper planning can cause major nerves to take over if the market were to move rapidly against his position. Trading preparedness is a mindset that needs to be developed over a period of time from the very start of one’s trading career. It is preparedness that results in self-confidence, and allows a trader to remain calm and unfazed in the face of what is often described as the brutality of the trading environment.
- Risk Management: This is not, by any means a new concept. “Only risk what you can afford to lose” That’s a very well-known cliché, but what does it really mean? Does it imply that you only risk 1-2% of your trading account at any one time? Personally, I have reservations about that ‘one size fits all’ approach. It is my opinion that a trader, even if he only risks 1%, is risking too much if he does not feel totally at ease with the potential for its loss. An array of factors should be taken into consideration when arriving at this decision. These include your track record, total disposable income, as well as your psychological state of mind, and how confident you are in your trading.
- Stubbornness/Ego: Unless you were one of the lucky few to have received the essential mentorship at the start of your career, you can probably relate to this aspect. The market is very good at humbling the trader who has an inflated ego. This ego, or stubbornness prevents you from exiting and reversing a trade when you know that you are clearly wrong. Revenge trading is born out of ego, and never ends well even if you realize momentary success. A trader might not consciously be aware that his ego is negatively affecting his trading; it most times requires self-reflection to bring it to light.
Only after the necessary preparedness can you truly embrace your fear of losing . The market is what it is, and if approached with the respect it deserves, it will likely reciprocate, and you will realize success. Be like a child. The market does speak…we only have to listen.
Thanks for reading, and I wish you a restful weekend!
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