Here’s the Secret to ‘Overnight Success’!
One of the recurring themes in the emails people send is that they are stuck in a cycle of winning a few trades but then ultimately losing the lot.
Some of them are looking for a strategy, others for advice on what time of day is best to trade or what indicators to use and avoid, and so on.
But practically all of them have at the back of their mind, the nagging question “How Do I Stop Losing?”Here's 5 simple steps to turn your trading around, assuming you're currently stuck in a losing rut.Click To Tweet
This post is the answer to that question. I’m going to give you five simple steps to turn your trading around, assuming you’re currently stuck in a losing rut. But before I give you the five steps – and at the risk of stating the obvious – you need to keep in mind that most important principle of future success, which is simply that you are building your success tomorrow with what you do today.
Trade well today and that builds a confident foundation on which you can continue in the future. Screw up today, or even worse, continue to trade in exactly the same manner that has given you nothing but losers lately, and your future is bleak.
This is the irony in the headline of this post: Five Steps to Stop Losing Tomorrow. Most people want to start winning Right Now without doing any ground work to prepare for a successful future. So they not only perpetuate their losing streak, but they tragically “Lose Their Tomorrows.”
So here’s my five steps to stop losing tomorrow:
1. If you haven’t already done so, switch to demo trading immediately.
If you’re losing right now, it will only compound the psychological damage if you are losing real money as well as your pride. You need to eliminate as much risk as possible from the activity of trading for the moment. This will give you time to think clearly, regroup and come back to the market with a fresh approach.
Above all, it will focus in your mind the fact that you must first trade in a consistently profitable fashion before you start risking real dollars. If you’re currently trading a live account and losing, going to a situation where you have virtually “nothing to lose” on every trade you take, will begin the important process of rebuilding your confidence and re-enabling you to take risks that you might not be currently taking, but should take.
(We all know the feeling of being rattled in a losing streak, and deciding to step back from trading for a while, only to see the strategy that we thought was a loser start to win. Not a good feeling!)
2. Log every trade you take in a trading log until you have been consistently successful over at least a three month period.
In fact, you should always log your trades, at least until you are 100% comfortable with the strategies you’re trading, as well as being consistently profitable.
3. At the end of each week, analyse your trade log results.
Look for certain metrics to measure against your ongoing requirements for a profitable strategy. For example, if you decide that you need to be making 3% (or three units, as I would prefer to look at it) per month, then that is where you would be concentrating.
It wouldn’t really matter whether you are winning more often than losing, or what the relative size of wins to losses is, as long as that metric was measuring up against your expectations and desires.
4. Once you have been consistently profitable trading in your demo account for a minimum of three months, move to trading in a micro account.
This incremental increase in risk should be achievable now that you have rebuilt your confidence.
It will also test your nerve just a little, which is good: it’s like slightly increasing the tempo in your gym program, only here we are exercising and building trader nerve rather than muscle.
Of course, continue to log, analyse and monitor all your trades in your trading log.
Once you have repeated the process of becoming consistently profitable over a period of at least three months in your micro account, it’s time to take the next step to a kind of Graduation Day: Start Trading a Mini Account! Congratulations!
Again, take care to build up very slowly, beginning with the least amount of risk that you can in the mini account. And continue to monitor your trading log, in time it will become your best friend!
5. Get yourself into a good ongoing learning situation.
This doesn’t necessarily mean enrolling in courses or schools or seminars etc, but you should be actively seeking out the right resources that will be continually testing your knowledge and experience, and expanding them.
On my list would be things like reliable news services, forex commentators and a couple of websites I go to on a daily basis in order to stay current with the market. I cover these in more detail in my Price Action Engine course, due to be released by the end of September 2015.
So there it is, my Five Ways to Stop Losing Tomorrow. No doubt everyone will come at the problem from a different angle, but over the years I’ve found that this is the most simple and consistently successful approach to turning around a losing streak.
So if you had to write a similar list, would you agree with my approach? Tell me what you would do differently and what you agree with in the comments area below.
Until next time, take care and trade well 🙂