Best way to deal with a string of losses

[davidh1819]

Hello People i am just seeking some advice

Basicly i have been trading FX for 9 Month now and i demo traded for 6 month before that i have come up with a trading system that has until now been profitable.

In the 6 month of demo trading i made a 18% return, Last month after 9 month of real trading i had a return of 9% not bad for my first 9 month in my opinion.

However i have taken a string of losses and my account is now down by 10% i have taken a 19% loss every trade i have done in the last 6 weeks has gone to a stop loss 8 trades i have made all losses. as a 22 year old newbie trader i have never delt with a string of losses although i new i had this coming and that all good traders have these moments.

I need advice from some veteran traders on here on how you guys deal with this. Although it has dented my confidence i think its best to learn from this inevitability.

Any help and advice it would be much appreciated.

 

[VielGeld]

There's a lot that could be said. Is it a problem with your method, or is it a problem with your psychology?

If the former, then you need to find some way to increase your hit rate. Maybe you could close out your trades earlier for smaller losses, or let some good trades run longer. Maybe you're picking sub-optimal trades in the first place which lead to a loss or market conditions simply aren't right for your method.

As to psychology, well, that can mess up your entire plan from the ground up. Do you lack focus and discipline, or do you tend to let some biases creep in your trading that cause the losses. When the market goes against you, do you stay in clinging to hope or because your analysis shows it can still go your way? You might unconsciously be self-sabotaging right now, and this is something that must be assessed right off the bat.

It's hard to say what exactly is the cause the string of losses, or if it's simply a natural occurrence you should get used to following your method without knowing more about what you do.

Finally, you can do some things to help with the analysis. While assessing all of the above (and more!), cut down your size until you get some winners back on track. Stop the bleeding. You need to get your hit rate back in shape, and more losses won't do that for you. Then go out and do something productive to shake off the nausea, and dig right back in once you're in the right frame of mind.

 

[Shakone]

I think you need to know inside that whatever you lose on a given day (as long as it's within reason and you haven't broken your money management), can and will be regained in following days. Confidence in yourself and your edge.

 

[EricReed]

I think you need to know inside that whatever you lose on a given day (as long as it's within reason and you haven't broken your money management), can and will be regained in following days. Confidence in yourself and your edge.

Truly great advice...

 

[wackypete2]

This year has been very choppy so far. audusd and eurusd have been trading in a 300 pip & 500 pip range respectively for all of February. If you are trying for large wins you may want to cut back to smaller stops and targets.

Also, until you get back on track it's a good idea to cut your leverage down and trade 1/2 of the lots you have been trading.

Peter

 

[bbmac]

If you are 19% down from the account hi after 8 losing trades this suggest your risk per trade/average risk/trade is something under 2.5%

In the 6mths demo and 9 mths live trading what was the strike rate of your edge ? (ie winning trades as a % of total trades taken ?) From this you can work out over a given trade sample what the likely maximum and typical consecutive losing runs are most likely to be, assuming all else remains equal. If a consecutive losing run falls outside of the typical - maximum then:

a. You have not followed your your trading edge's rules
b. Your trading edge may have stopped producing in the market conditions we are experiencing now that may not have been part of your demo and live period to date
c. However improbable you have just been unlucky to experience a losing run of 8 consecutively.

Whatever the case you need to find the answerr to this. Have a look at this doc posted here to post # 97, it deals with what you really should know about your trading edge in it's content. http://www.trade2win.com/boards/gen...free-seminar-london-sat-29-jan-2011-a-13.html

G/L

 

[gogetter]

Truly great advice...

Yes excellent advise

 

[BILLV]

However i have taken a string of losses and my account is now down by 10% i have taken a 19% loss every trade i have done in the last 6 weeks has gone to a stop loss 8 trades i have made all losses

Hi Dave

Have you made changes to your trading plan or have changed your trading times or your broker?
Go back and look at your trades in detail.
You need to identify the reason for each loss.
Are your SL's too tight?
With choppy markets we need to move our SL's further away or they are likely to be hit.
Check your lost trades and see if having a higher SL would have helped.
Also, in recent times some currency pairs moved a lot and moved quickly maybe your trading plan doesn't allow for such large moves

 

[Combo]

Try investing in stocks instead. I consider myself pretty smart but wouldn't bother with Forex as there's no clear logic behind it. I have been pretty succesful with stocks but Forex just feels like gambling, and I suspect most people will ultimately lose trying to play that game. In the 15 months you've spent with Forex you could potentially have made multiple returns on the stock market, there are some extremely undervalued companies out there.