They will happen, and they will happen a lot. How you deal with these ultimately determines your future as a Forex trader.
This week’s question is from Mario
“How do you handle a losing streak in trading? Do you change your approach?”
Mario from Setúbal, Portugal
It’s time for short answer/long answer. The short answer comes now, the long answer is where the gold is hidden.
We’ll also talk about a few concepts we went over in the Discipline video.
What is the Discipline video you ask? It’s required viewing, especially if questions like the one featured in this episode have ever crossed your mind.
And the short answer, which should be obvious after you’ve watched the video is — you do nothing. You simply keep going and see what your total account looks like at the end of a 12 month period.
Real Talk
Losing streaks happen all the time. By losing streak, I mean 3 or more losing trades in a row.
This can take a chunk out of your account. An account that could have been doing well and you were super proud of.
Now your overall results are not what they were before.
Time for a change?
Fuuuuuuck no.
Seeing as how losing streaks happen all the time, no matter how good your trading system is, why would you make changes every time something does not go your way?
You’re doing things the No Nonsense Forex way, correct?
You’ve tested a system, and proved that it works over time, correct?
Then what’s your problem?
You knew this was bound to happen. This is why the Discipline video was so important. It trains you to block all of this stuff out — the losses AND the wins, in order to come out on top in the end.
If you were to make changes to your system every time you hit a losing streak, you would be adjusting your system for the rest of your life.
Dumb. Let it run. Take every trade. I’ll say that last part again…
Take Every Trade
After a nice run in a nice, trending market (we love these)……things are now consolidating.
The market isn’t sure where to go next, and things are choppy.
You’ve gotten caught up in this chop (And don’t fret, there are indicators to avoid this. Coming soon.), and you’ve lost a few trades in a row, erasing some of your wins form before.
What do you do now?
“I don’t know asshole, how about you tell me?”
The answer should be obvious if you’re caught up on the psychology videos. You keep forging right head.
But here’s what you absolutely do NOT do.
Do NOT “take a break from the market until it starts trending again”.
Stupid Stupid Stupid.
Why? Because as soon as you do, that’s when it decides to trend again, leaving you on the sidelines while everyone else is participating in a big, beautiful trend.
And then you jump back in right when it gets choppy again.
Lather, rinse, repeat, lose.
What Did The USD/JPY Ever Do To You?
And by the same token, do NOT take a break from certain currency pairs, just because they’re not acting in the manner you would like them to.
You’ve done this before. I know you have.
If you go all the way back to Episode 4 of the podcast, where I tell you to trade every major currency pair under the sun (except the EUR/CHF, which I have changed my stance on), I point out something big:
Currency pairs do not have their own unique movement.
Meaning, if the USD/JPY for example, is being a little shit head and losing you a bunch of money, it’s only a matter of time before it gets back on track.
It’s not just “a USD/JPY thing”.
And if you are wise enough to stay the course and take every trade like I said, you will be there when the USD/JPY decides to trend again.
And this move will often erase all of your losses from before.
….but only if you’re present for it, and don’t decide to “sit this one out” like a sissy.
“Oh noooo! The USD/JPY is going to be choppy forever and I’m going to lose everything! Oh nooooo!”
If you do that, you’re cementing those losses. Your fear of taking more losses is preventing you from erasing them with one good trade.
Take….Every….Trade — as long as your system tells you to.
Do nothing else.
Good News On The Horizon
Losses suck. Losing streaks really suck.
But guess what?
We’ll be filling in the other parts of that algorithm soon.
- ATR
- ??
- Confirmation Indicator
- ??
- ??
- Exit indicator
And what is the main reason for that, you wonder?
We can do a lot of damage just by having those three things in place.
Why do we even need to add more and complicate things?
To eliminate more losses
Remember the elimination blog post?
That post, and the video contained inside of it, showed you something really powerful. And it was this fact:
Eliminating losses is every bit as important as gaining wins. It has the exact same effect on your overall account.
And what do other pieces of the algorithm do?
Eliminate your losses.
Remember that 4-trade losing streak you just took?
What if every 4-trade losing streak you have in the future turned into a 1 or 2 trade winning streak?
…and those other losers never happened?
What would that do to your bottom line?
Answer: Great, great things.
And we’re getting ready to approach those other pieces. Stay locked into this site. You’re going to want to be around for it.
Conclusion
Losing streaks happen, fucking deal with it and move on.
And by “deal with it”, I mean pretend they didn’t even happen and keep right on trading your system like you have been.
Make no adjustments.
And rest easy, knowing that we’re gonna hack those losing streaks down a lot in the next few months.
— VP