Confirmation bias in trading, why 99% crowd drain deposits?A lot of material has been written on the topic of psychology in trading. Especially often you can stumble upon unpretentious articles on the Internet, where the author, like any self-respecting “psychoanalyst”, is trying to talk on the topic: “Why are deposits being drained”.
And everywhere, as if according to one learned pattern, they write about fear, about greed, about the fact that one should not sit out losses, one should allow profits to grow, one should put stop orders, observe risks, keep a diary, work according to the system and other banality, oh which everyone has heard.
Our idea is that in trading there can be only two options - either you know what you are doing and then just systematically work on your trading setups, or you don’t know and just play “guess the tune”. Unfortunately, most traders are bright representatives of the second category.
A typical beginner's decision-making scheme: open any instrument, choose a “convenient” timeframe, try to draw a line, throw in a couple of indicators, and then sit and carefully watch the price... Many people call this self-hypnosis “market analysis”. And then something happens - the price goes down sharply and we begin to "see" the entry point for the purchase - now the price will return, it always rolls back. Click on BUY, choose a fatter volume in order to earn more - the deal is open. We sit, tremble, wait for the price to rise and... oh my God, the market gives us 2 points of profit! We cut profit immediately. We repeat this operation N times, and when the market does not give immediate profit, we average it by the same volume.
The account sometimes goes into a small drawdown, but this is not terrible, in most cases the “system” works like a Swiss watch. Having calculated the profit, we already imagine ourselves as millionaires and market gurus. But suddenly the moment comes when the system gives a small failure - we see a drawdown of half an account, the price continues to fall down ... What to do? We go to analytical sites, feverishly read reviews, especially lingering on those that say that the market is oversold, somewhere near a strong level, we are waiting for a reversal. Having calmed down a bit, we look at the sentiment and see that 85% of traders are also buying ... phew, the majority cannot be wrong!
After reading the analytics, looking at the sentiment, we return to the chart. Looking at it from a different angle, we make an expert opinion - no, it definitely won’t go lower, now let’s turn around. We add to the rest of the margin and, with bated breath, look at the monitor. And then, unfortunately, the price stubbornly ignores analysts, the market goes further down, and our trades are closed by stop loss. There is no limit to disappointment, how is it, everyone predicted a reversal, and the chart is moving further along the trend!
This is the so-called confirmation bias. When we act not according to a pre-arranged plan, but for good luck, we are looking for confirmation of our innocence in every possible way and completely ignore the opposite information.
From this, the main conclusion is - if you are not sure, do not play! We need to be open to the perception of all the information available, and not just the one that “suits” us. Only a systematic approach can defeat cognitive distortions!
Psychology
How to save your nerves and make trading enjoyable?!How to save your nerves and make trading enjoyable?!
What to do if you have already decided to embark on the path of trading, but are facing psychological problems. First of all, let's identify these complexities and reiterate them:
1. Fear of entering a position. Even when the formation being traded is familiar to you, and the entry seems obvious, you look at the candle going up, but you still cannot force yourself to press the BUY / SELL button. The market goes in the expected direction. The mood is spoiled today.
2. Fear of being in a deal. You made an entry according to the trading system, provided for all the nuances, placed a stop order, but the sensations of a possible loss of money are so unpleasant that they make you drop everything, deviate from the plan and, in the end, close the deal.
3. Bad mood, irritability from a deal closed in the negative. You skillfully entered the position, checked the entry on the trading system, at first everything was in order, but catch the stop loss.
Familiar? So know. These emotional reactions are typical for those who have just begun to connect their path with trading. Medicines for these "diseases" are also known:
A. Formalize your trading system. If the deal matches it, enter. Why is it so easy? The fact is that in the long term, a high-quality trading system has a statistical advantage. And if you follow it correctly, then a positive result is almost guaranteed.
B. Start trading with those amounts and those risks that are insignificant for the deposit. But not a demo account. If you are responsible for small amounts, then the risks at first will be insignificant. But the emotions will be quite similar. Mistakes made at first will teach you to do the right thing. But the fee for this will be much lower than the merged deposit. Gradually increase the amount of risk as you grow in experience.
Q. Periods of negative values in a position will have to come to terms. If you are confident in your actions and the trade corresponds to the trading system, know how to wait and hold the position. This is the nature of this profession. After all, even if something goes wrong, then you are insured by a powerful medicine - a stop loss.
G. And, finally, the last. To get rid of psychological fears and trade easily - you need to trade. Psychological stability will come with experience and professionalism, when you get a feel for the trading system and get your hands on trades.
Good luck with your quality deals!
👁️🗨️ You See what YOU WANT to See 🧠Further to our idea:
:
In other, more simple words: We See What We Want to See
Obi-Wan Kenobi once advised Luke Skywalker to not trust his eyes, because “your eyes can deceive you.” Most of us can recall an instance from our own non-Jedi lives when these words rang true. Think of a time when your eyes saw what they wished to see: a person you were thinking about on a busy street, a heart-shaped pebble you were looking for on the beach.
This phenomenon, called motivated perception, has been explored in psychological research for decades. Indeed, the world as we conceive it in our awareness is not exactly an accurate representation of what it truly is. Our perception is often biased, selective, and malleable.
Even our desires can affect what we see by impacting the way we process visual information.
IN TRADING:
We see what we want to see. You guys can see a million different ideas but your eye is just a gateway to the brain and that's where the problems start:
You will See what YOU WANT to see..and you will act accordingly.
Will make a small video to elaborate on this with some tips on how you can protect yourselves from your own EYES!
One Love,
the FXSHRINK
👁️🗨️Watch the video, i explain in the most simple way how you can stop letting your eyes (and brain basically) fool you 🧠
FOMO - Analysis from a Trading PsychologistFOMO.
Fear of Missing Out.
I can feel FOMO’s omnipresence in the trading world right now. We have seen some large career changing moves in Commodities & Futures as of late. Extend the lookback time a few years and the Cryptocurrency universe is surely included.
I decided to turn to my favorite trading psychologists, Brett Steenbarger,PhD. Brett has been in the trading game since the late 1970’s and his Nov 21’ speech on Trading FOMO piqued my interest. Below is a summary of what I took away from it, and some preventative ailments attributed to Brett’s psychological evidence-based outcomes.
FOMO is a P&L Killer! At its core FOMO is a fear. The problem is not that we missed the trade, it’s that our brains perceive that missed trade as a threat to our future, our success, our reputation. When humans are afraid of something, or see a threat, it produces anxiety. This fear takes blood away from the part of the brain where higher level thinking takes place and sends it to the part that impulsive thinking lives. There WILL be poor decision making under the influence of anxiety. The key to solving this issue is to take the threat out of the situation.
Solutions:
Taking a break from the screen is healthy but it is not a long-term fix. Brett explains how to train in exposure therapy (His presentation explains this in greater depth.) Slow breathing and visualization are more adept at battling FOMO. If you can visualize a calming place or situation and pair it with that fear, daily practice and dedication will prevent blood flow to the impulse zone. Gradually, when FOMO comes around, you will experience feelings of safety. Combined with expanding your time of reference, understanding, and acknowledging FOMO will make those events look like potholes on a long highway.
Missing a trade is unfortunate, but will it end my career? No. Will buying at the top, and then being so irate that I add to a losing trade and forgo stop orders end my career? It might. Will I be thinking clearly on my next trade with a fresh mistake permeating my thoughts? No.
The best motivation to avoid FOMO is to develop emotional hate towards the negative consequences of it. In the fullness of time, the desire to avoid negative outcomes becomes self-reinforcing with repetition and therefore cements as an internal priority. This works across the board in other life scenarios as well.
Tapping into other motivations besides P&L is one that really hit home with me as well. Brett dives into the desire to learn and grow as a greater motivator than just P&L alone. This addition will create a dual purpose to each trade. You are diversifying your outcome! If you come away from a trade with a negative P&L, but with a positive learning experience, you are building your Learning Capital. With time under this premise, your Learning Capital will be indistinguishable from your monetary statement.
Instead of tying your value as a trader strictly to your P&L, tie your value to your consistency and risk management. The magnitude of your P&L is nothing without consistency. Risk management begets larger positions, lower drawdowns, and an overall better quality of work life.
A Day comes with myriad experiences. Create a diversified life with people and activities that fulfill you outside of trading and your trading will improve. Reminding yourself daily of this is important.
Tying all of this together is the practice of keeping a daily ABCD Journal.
A - Activating Event – What got you upset? - Missing the trade in this case.
B - Beliefs about the event – Little voice in your head – Why is this upsetting to you? “Other people are getting ahead of me, I’m not as good as they are”
C - Consequences from the event – How does negative thinking affect your subsequent trading? I’m so upset about missing the opportunity I go ahead and miss the next one!
Becoming proficient in ABC will allow you to recognize the triggering event in real time. You begin to identify the negative beliefs and become a pro at understanding the magnitude of the consequences. You can change the pattern of your behavior because the consequences are so front and center.
D - Disputation- You are talking back at that negative thinking. How would you talk to someone you care about who is in that situation? Mentoring a teammate that missed a big play involves constructively lifting them up and helping them learn from it with a comforting tone. You aren’t going to beat them up.
I welcome all feedback and am also here if you want to chat about a particular experience. Happy Trading!
-Paul Wankmueller, CMT
Blue Line Futures Director of Content & Education
4️⃣ Trading habits that have to go 👋We've all done it.
At some point in your trading journeys bad habits set in.
Here is my four trading habits you've got to kick in order to stay profitable.
1. Overtrading
We all been there with this one.
We think we have to be in the market all the time.
We don't and its okay to be flat at times.
No strategy should have excessive trade volume.
More time in the markets the more chance of catching a cold.
Overtrading can happen when we also start revenge trading.
You've caught some losses and your trying to get it all back.
Don't overtrading combined with revenge trading is a no no. Take a break.
Trading with no strategy or system
Should never be in the markets with out a plan or system.
More importantly no trader should be entering markets with out a proven edge.
Back test and forward test your strategy and make sure you are entering markets with a proven plan.
Psychology wise it makes trading so much easier to deal with.
No plan will lead to nothing but stress and losses.
No stop loss
Trading with no stop loss is biggest sin of all.
It's just not worth risking huge amounts of your trading capital on the line.
One big crazy move in this uncertain world could do damage.
Plus how can you develop a proven plan if stop loss is not included.
Also moving your stop loss should not be part of your trading.
As you've just altered any strategy being trading into the unknown category.
No risk management
So I've mentioned stop loss but that is only one element of risk management and it doesn't stop there.
Risk management includes many aspects you'll need to consider.
That includes position sizing relative to your capital size.
The psychology behind losing runs and how they are factored into your trading plan.
Work to set and proven trading rules as part of your risk management.
Be sure not to add to losing positions.
Know when you are wrong and move on to the next.
Failure to follow risk management means you will essentially be gambling.
Be realistic in expected returns is a big factor in risk management.
Sticking to all of the above and not allowing these habits to enter your trading will ensure you keep that trading account growing.
Thanks for taking the time to read my idea.
Darren 👍
LET'S GET REAL: Fear of Losing! Hey Traders,
Most traders battle it. I myself had to progress past this in order to achieve consistent returns trading the markets. It is seen as one of the hardest challenges to pass in terms of emotional discipline. Understanding yourself better so you can make decisions in a calm, composed and consistent manner is crucial to success.
Today I wanted to touch on that. I wanted to talk about the fear of losing what spurred from my fear of losing, how I progressed through it (it still creeps in from time to time). Hopefully you can take from my story and how it improved your trading or how it can help you progress past that fear of losing.
If anyone has any questions or maybe some other stories in the way they progressed through a fear of losing or a fear of being a failure, please feel free to share in the comments and I'll get back to you as soon as possible.
Have a fantastic trading week!
Educational Post about Defining zones : Read the CaptionIf you have been led to believe that the prices move depending on the number of buyers and the number of sellers; if the number of buyers is greater than the number of sellers, prices go up, & if the number of sellers is greater than the number of buyers, prices go down. Then you would be wrong...
The number of sellers or buyers is not what moves the price. What if one seller is doing all the selling to thousands of buyers? The price will go down. The answer to our question is that it is the degree of aggression of the buyers or the sellers and the volume of order-flow they submit is what moves the price. That's what creates the imbalance between buyers and sellers. Your goal as a trader is not to try to catch tops and bottoms that would be absolutely crazy. Your goal as a trader is to find suboptimal zones or in other word good deals.
What is a Optimal Zone?
A zone in which price has already a trend defined by a rally or drop. Most of the time it is a breakout and pullback structure close to a very strong supply and demand level. Most important is that:
Buy optimal zones are close to a macro buy zone In other words price is cheap = good deal to buy.
Sell optimal zones are close to a macro sell zone. In other words price is expensive= good deal to sell.
What is a Sub-optimal Zone?
Buy sub-optimal zones are close to a macro sell zone In other words price is expensive = bad deal to buy.
Sell sub-optimal zones are close to a macro buy zone. In other words price is cheap= bad deal to sell.
please if you find this idea interesting make sure to follow this profile and drop your comment and like :) thanks family! I wait your comments
Don’t bite the bait. Time is money. This is a case of comparative advantage. Which means the less time it takes the coin to produce oil or energy, maybe even transactions. All will go down and then pop back up, much like a sinking ship.
Within the next 5 hours, an entry point will be present. It’s time to glean for Q2, because after this the prices will hit an all time high and then go back down until July. A lot will assume now is too soon, but yesterdays price isn’t todays price.
However, the cup and handle has presented its self. Now the next sign of equilibrium the price will make will be like a Nike check. Or a Wolfe wave. The eagle has left the nest.
2. API CRUDE OIL U.S.: anything under 5 is a sink. Forecast is in the -1.0 range.
TOTAL VEHICLE CAR SALES: Elon and Twitter
Don’t hire the bait just yet.
Four trading fears you will have to overcome 😱The stats for retail traders are not pretty.
It's no secret around 80% of all retails traders lose money.
The reason most fail is the four fears not being overcome.
Fear of being wrong!
We are emotional creatures and lets be honest none of us like being wrong.
This trait shows in some more than others but there is no place in trading for this trait.
It's impossible to 100% right all the time it's not even possible being 90% or 80% right all the time.
Once the reality sets in your not going to be right all the time we then as traders have fear of being wrong when seeking our trades or strategies.
Fear of losing money
We all suffer this fear at some point.
What we need to understand is all accounts suffer periods of drawdown.
I firmly believe the 80% of all retail traders stat is so high due to people losing money and quitting.
The reason money is lost is due to poor strategy or no strategy.
Once in a whole the fear of losing more will push people away from trading.
Fear of missing out
It's probably the fear of missing out that led you here in the first place.
You see all the lambo's on social media and the life style and fear of missing out is already in play.
Then comes seeing what everyone else has profit wise.
Then comes paying attention to everyone else and full blown FOMO instead of sticking to your own game.
Fear of leaving money on the table.
No better feeling than seeing your trades run in profit.
The screen is lit up blue and your loving it.
But now comes the fear of letting them trades play out.
Your leaving money on the table and it's now a fear you'll lose that money.
It's one of the biggest mistakes a trader makes!
Cutting winning trades to soon and letting losers run for to long.
So how to overcome these fears?
There's many elements to overcoming the four fears .
There's so may and then even sub elements of those.
Hence why this idea had the two brainstorm bubbles on the chart of what fears haunt us as traders.
Followed by the bubble of all the thoughts you need to take in to consideration as a trader.
It's imperative as traders we build a robust tested plan.
Sticking to your own plan and lane is crucial.
Just avoid others that blur your plan.
Losses are a part of trading quicker you accept this as a cost of business quicker that fear of losing money disappears.
There is many more on the chart drawing but quicker these behaviours are followed as a trader the quicker the four fears will disappear.
Here's to a good rest of the week🥂
Thanks for looking at my Idea
Darren 👍
How to win over greed?🎃1. Greed is the problem
Many beginners and even experienced traders face greed. It's a feeling that makes you believe in your superiority over the market:
• Opening a lot of trades, breaking risk management
• Continuing to trade after incurring a loss
• Refusing to take profits, hoping to earn more
• Averaging losing trades, because everything is about to change.
• Believing in the reliability of your pattern, although no pattern or indicator always works out 100%.
2. Why does greed take over?
We all have our own desires and goals. Society teaches us that we shouldn't deny ourselves comfort. This leads the vast majority to take out loans for new clothes, iPhones, Cars.. This is how people get used to greed's superiority and put it before discipline, getting accustomed to being able to live beyond their means.
What do you think happens to such people when they come into trading?
God forbid, such a person immediately learns about futures, then he will lose everything in a month at most. This is exactly the 95% who lose money in the market.
They suddenly see an opportunity to make a million out of $10,000 in a month, and, inspired by the stories of dogecoin millionaires from YouTube and Reddit, start to long bitcoin with x125 leverage.
There is another type. They do not rush to make money, they act more cautiously. They set themselves up right away that "trading is a long game and there is no hurry". They develop steadily and study pattern after pattern. However, their game pays off very slowly, and under the influence of their expertise they allow themselves more and more "experiments". They are like King Theoden from Lord of the Rings, who was slowly losing his mind under the watchful eye of Wormtongue.
3. How do you get around greed and start using it to your advantage?
Change your perspective. Instead of being greedy for money, become greedy for your professional growth . Ironically, if you stop focusing on money, they will come.
Create a journal and start analyzing your trades:
• What were your reasons for entering?
• Did you need to open that trade or was it suboptimal?
• Did you act under the influence of emotions, and if so, which one and why?
Develop, grow, and reward yourself when you get better, even if your trading results are unchanged. Your brain needs to get used to the fact that the most important thing now is discipline and small improvements. Step by step, you will become a profitable trader and, when you do, withdraw your honestly earned profits into fiat to reward yourself for your fortitude and persistence. You will succeed, because unlike all casino players, you will have the backbone and endurance!
Good luck on your journey! If you have any questions, feel free to ask them in the comments, I always check and answer them.
Leave a like so you can enjoy the trader psychology posts in the future as well, and thanks for reading to the end. You are the best!
Sunday afternoon backtesting sessionToday I am backtesting trades on EURUSD to further improve my strategy and my ability to apply my strategy. It is important to keep your tools, and mind, sharp so that you can execute your trades in a live market that has major market players, news events, volatility, liquidity with experienced traders with high end technology with a high end education trading these markets. This means you must find your edge and constantly practice it to refine it, improve it, and remember it anywhere, any place, any time.
The myth of risk management - Hack it :) I speak to a lot of traders, new and veteran.
It's surprising to see how so many are not sure how risk is calculated and what the exposure really means in terms of P&L.
This obviously is a major block in the road on the way to gaining confidence necessary to avoid losses.
So let's break it down -
*P&L is calculated by lot size * movement.
Example: If you have 100 ounces of Gold (1 lot) - That's $100 in P&L (Profit/loss) for each $1 Gold moves in value, so if the price 1890 and you are buying 1 lot , price moves by $5 higher - That's a $500 profit ($100*$) , same thing in reverse, if it would drop by $5 that's a negative of -$500 in open P&L.
Leverage decides what you are technically able to open in terms of margin used.
So if your leverage on Gold is 1:100 - The value of a 1 lot trade is the price of Gold multiplied by the amount of ounces , so let's say 1890*100 = $189,000 value trade, but your leverage is 1:100, so you would only need $1,890 of used margin (189,000:100) to open the trade.
But if you have 1:20 as leverage, you would need 5 times more used margin to open the trade.
So a common misconception is that your risk is your leverage.
That's not true.
Your risk is your lot size.
But if you have very high leverage , than you can open very high lot size with a small account - Which is extremely dangerous and not advised.
So what does an experienced , smart trader do? No matter what his leverage is, he understands the short-term and the long-term range of movement, and opens a lot size that fits the size of his account considering the range of movement.
If the account size is $100,000 , and you are buying 1 lot of Gold:
The weekly range is 1840-2,000 , the short-term range is 1880-1910 - Price is 1890
So the exposure is ~$1,000 in the short-term (1%) back to the short-term support 1880 , compared to $2,000 on the short-term resistance (2%) of 1910.
The long-term exposure is to 1840, meaning a $5,000 exposure 5% ($100*$50) from 1890 - but 2,000 is the top of the weekly range, meaning - $110 up ($110*100) = $11,000 (11%).
So didn't really matter what the leverage is 1:20 or 1:100, what matters here is the range and the lot size.
Thank you for reading!
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Why Less Trading Gives Better Results!Hey hey traders!
We're coming to you with a nice and short video on why trading less is actually better for you, atleast based on our experience!
Being a full time day trader I found it hard to actually be at my best and trade all day long... at the end of the day trading is a means to an end, its only purpose is for you to exchange your knowledge, effort and focus for money, yet you do not need to sit there all day to do that, 60mins of focus is better than a whole day of nothing.
Try what we preach for the rest of the week and you'll be amazed at your performance!
Good luck trading!
How to distinguish a fake guru from a real professional💯How to distinguish an online conman from a real professional
In 2016-17 there was a boom in the info business, and this field grew so fast and unregulated that it opened the door for many scammers. And, unfortunately, many newcomers are caught by them and lose money.
After all, scammers are not limited to the truth and can draw the sweetest pictures in the head of their potential victims.
And what industry attracts these online conmen the most? Of course, our favorite crypto. It is so attractive because it has the following properties:
• No punishment for fraud
• The ability to promise endless profits
• The unawareness of the masses about its nature
Last year, crypto enthusiasts lost more than $14 billion to fraudulent schemes. This is more than the annual budget of Serbia 🇷🇸, Nigeria 🇳🇬, and 3 times more than Georgia 🇬🇪.
So that you don't lose your hard-earned money, I have prepared for you a simple list of how to distinguish a pseudo-expert from a real pro:
The presence of real statistics. And not for one month, but at least six months. When giga traders sell you a VIP pass to a super-mega-secret group and show you how they made fifty X's by longing doge, ask for real statistics with all trades, or let them return under the rock from which they crawled out.
Talks not only about the victories, but also about his defeats, analyzing mistakes and showing opportunities for growth. Don’t confuse it with a heartbreaking story to get attention.
Never saying something will happen with 100% probability. No one is Nostradamus, and if your favorite expert is yelling about having a crystal ball and going to Mount Sinai at night to ask God if the bitcoin will grow, then I have bad news for you.
Not showing off. For a successful pro, earning thousands of dollars in trading is the norm, he's used to it. He does not need to prove to everyone that he is worth something, showing his park with Lamborghini, he knows himself that he is cool.
Having a huge number of real reviews. He doesn't hide the bad ones and communicate with his dissatisfied audience, because he knows that the truth is on his side and he is responsible for his actions.
Do you think this post would be helpful to a newcomer? If so, click the like so more newbies will see it trending and I can boast to my mom)
Anything to add? Have you ever faced scammers? Tell us about your situation in the comments
FOMO - Analysis from a Trading Psychologist FOMO.
Fear of Missing Out. We have all heard this phrase. It could pertain to that VERY LAST concert of your favorite band in the middle of the week and coming late to work the next day. Scrolling through Instagram and making a split-second purchase that never works out. We get the idea.
I can feel FOMO’s omnipresence in the trading world right now. We have seen some large career changing moves in commodities as of late. Extend the lookback time a few years and we could probably open a FOMO Crypto clinic, complete with padded rooms. Why didn’t I catch that move in Euro Power? I can’t just sit here and watch my neighbor get rich; I missed the only opportunity to make money!
Well, Crude Oil, Gold and Wheat all taught traders suffering from FOMO a healthy lesson these past few weeks. Or are they doomed to repeat it again? Traders rarely want to admit weakness, but it’s essential to becoming profitable. Hi. My name is Paul Wankmueller, and sometimes I suffer from FOMO.
I decided to turn to my favorite trading psychologists, Brett Steenbarger, PhD. Brett has been in the trading game since the late 1970’s and his Nov 21’ speech on Trading Fomo piqued my interest. Below is a summary of what I took away from it, and some preventative ailments attributed to Brett’s psychological evidence-based outcomes.
FOMO is a PnL Killer! At its core FOMO is a fear. The problem is not that we missed the trade, it’s that our brains perceive that missed trade as a threat to our future, our success, our reputation. When humans are afraid of something, or see a threat, it produces anxiety. This fear takes blood away from the part of the brain where higher level thinking takes place and sends it to the part that impulsive thinking lives. There WILL be poor decision making under the influence of anxiety. The key to solving this issue is to take the threat out of the situation.
Solutions:
Taking a break from the screen is healthy but it is not a long-term fix. Brett explains how to train in exposure therapy (His presentation explains this in greater depth.) Slow breathing and visualization are more adept at battling FOMO. If you can visualize a calming place or situation and pair it with that fear, daily practice and dedication will prevent blood flow to the impulse zone. Gradually, when FOMO comes around, you will experience feelings of safety. Combined with expanding your time of reference, understanding, and acknowledging FOMO will make those events look like potholes on a long highway.
Missing a trade is a bummer, but is that going to end my career? No. Will buying at the top, and then being so irate that I add to a losing trade and forgo stop orders end my career? It might. Will I be thinking clearly on my next trade with a fresh mistake permeating my thoughts? Nope. The best motivation to avoid FOMO is to develop emotional hate towards the negative consequences of it. In the fullness of time, the desire to avoid negative outcomes becomes self-reinforcing with repetition and therefore cements as an internal priority. This works across the board in other life scenarios as well.
Tapping into other motivations besides PnL is one that really hit home with me as well. Brett dives into the desire to learn and grow as a greater motivator than just PnL alone. This addition will create a dual purpose to each trade. You are diversifying your outcome! If you come away from a trade with a negative PnL, but with a positive learning experience, you are building your LC (Learning Capital). With time under this premise, your LC will be indistinguishable from your monetary statement.
Instead of tying your value as a trader strictly to your PnL, tie your value to your consistency and risk management. The magnitude of your PnL is nothing without consistency. Risk management begets larger positions, lower drawdowns, and an overall better quality of work life.
A day comes with myriad experiences. Maybe you woke up next to the love of your life, saw your kids off to school, got an extra good boy wag of the tail from the pup, the list goes on. Create a diversified life with people and activities that fulfill you outside of trading and your trading will improve. Reminding yourself daily of this is important.
Tying all of this together is the practice of keeping a daily ABCD Journal.
A- Activating Event – What got you upset? - Missing the trade in this case.
B- Beliefs about the event – Little voice in your head – Why is this upsetting to you? “Other people are getting ahead of me, I’m not as good as they are”
C- Consequences from the event – How does negative thinking affect your subsequent trading? I’m so upset about missing the opportunity I go ahead and miss the next one!
Becoming proficient in ABC will allow you to recognize the triggering event in real time. You begin to identify the negative beliefs and become a pro at understanding the magnitude of the consequences. You can change the pattern of your behavior because the consequences are so front and center.
D- [Disputation- You are talking back at that negative thinking. How would you talk to someone you care about who is in that situation? Mentoring a teammate that missed a big play involves constructively lifting them up and helping them learn from it with a comforting tone. You aren’t going to beat them up.
I welcome all feedback and am also here if you want to chat about a particular experience. Happy Trading!
-Paul Wankmueller, CMT
Trader comfort zone journey 🥴➡️😊Let's end the week on a thoughtful note.
On the chart is a visual I see the other day that I feel relates to trading massively.
It's called the comfort zone map.
This can be applied to many situations in a person's life as a generic visual map.
But I really do think it represents the journey every trader must take in order to become successful.
COMFORT ZONE
It's where we all start any journey
Sat in the comfort zone not wanting to leave as we dont want to fail or get hurt.
Some will stay in this zone forever but will never progress.
If you are on TradingView looking at this idea then chances are leaving this zone is already being explored.
We all like this zone put you have to take the leap of faith in order to progress.
As traders we all have to leave our comfort zone in order to start our trading journey.
FEAR ZONE
This is the worse zone for any human on any sort of journey but more so for traders.
Things are really uncomfortable in this zone and pain will be felt.
Mistakes will made, as traders money well be lost but key bit is learn from those mistakes.
Plenty of people will turn their backs at this point and jump back into the comfort zone.
Those who carry on trying to achieve will have other people questioning what are they doing.
Don't let opinions sway you and find a way to find your feet in this zone.
You will lack knowledge, You will lack skills at the start but traction comes with hard work and persistence.
LEARNING ZONE
The traction gained and hurdles overcome in the fear zone leads you to this zone.
Once in this zone it's now all in the eye of the beholder.
This is now the new comfort zone but don't drop the ball you can end up dropping back in this zone.
Now's the time in this zone to really kick on but it can take time.
You are now laying the foundations of an exciting future.
Take the base knowledge gained and gain even more in this zone.
Problems are no longer holding you back as you are able to overcome.
You enjoy the challenges and tackle them head on while still learning.
Putting the time in here takes you to the next step but also stands you in good stead for rest of lives hurdles.
GROWTH ZONE
This where the fruits of your labour are felt but not just in trading profits.
Mindset and contentment are on point.
Due to the above continued learning never stops.
Objectives are now smashed.
Purpose and fresh identic is now found within yourself.
Continued Personal growth as well as financial growth is now a element of life.
In this zone the end game is infinite but shouldn't be taken for granted.
Hard work has got you here but don't get complacent.
Treat everyday as an opportunity to fulfil your life even more in many ways not just money.
You earnt the right to be in this zone so enjoy.
But be grateful in this zone and take nothing for granted.
Stay level headed and with the right mindset this becomes your new comfort zone to enjoy forever.
Enjoy the weekend folks and see you next week 👍
Darren✌️
The Dunning–Kruger effectAfter recently doing a review of my last 6 months of trading, I recognized that my portfolio value over this period looked very similar to the Dunning–Kruger effect curve. (a psychological phenomenon that suggests people are not always the best evaluators of their own performance). The theory is often applied to trading because most retail traders experience a similar effect.
After spending 3 months of a practice simulator, I deposited real funds into a trading platform. Within the first week I saw a 24% increase which was shortly followed by loosing half my account value in the coming months. I then decided to take two weeks out and reflect on my performance. It was in these two weeks where I stumbled across an article called "5 steps to becoming a trader" (which I have linked to this post). I came to realize that I was completely incompetent. I didn't follow my trading plans, I got caught up in emotions and I was almost gambling money away in the hopes of getting rich quick.
The harsh reality is trading is hard. After a total of 9 month, I have only just managed to see a net positive return. I have spent thousands of hours only to be outperformed by an Index fund. One article won't change your performance, but these are some things that I learnt which could get you closer to conscious competence:
1. Don't trade with emotions, trade with your plan
2. Keep your risk/reward >1.75
3. Never risk enough money to loose sleep (enter each trade as if you have already lost the money you placed)
4. Reflect on performance and learn from mistakes
5. You don't need to win lots, you just need a mathematical edge
As a trader gains more experience, they become increasingly confident and more likely to see positive returns.
Stay dedicated!!!
How to lose your deposit quickly? Easy to follow Step-By-Step🔥Why am I qualified enough to teach you this?
I lost 16 deposits and in 6 years I heard dozens of stories of people who lost their life savings in a couple of months by trading. I have personally tested many of these rules and confirmed that they work.
So what are we waiting for? Lets get it started!
1. Trade with maximum leverage
There is no need to trifle, the bigger leverage is, the greater your profit will be🤑
2. Don't use stop losses
SL’s are for the weak. You probably remember how many times your positions went in the right direction after you closed them by stop loss. Stop losses are evil🤮
3. Average losing positions
Everything is simple here - the more you average, the less you lose. That means you can keep going. Nothing ventured, nothing gained🥂
4. Use your last money and don’t be shy to borrow
The more money you put in, the more money you pull out. Since you are 100% sure that BTC will grow, take loans not only in banks, but also from shady organizations, do not look at interest - you will repay everything back in a month anyway, and your profit will cover any losses💵
5. Trade only when you have been fired from work, haven't slept all night, your girlfriend/wife has left, or you have quarreled with relatives
When everything is bad in your life, it is better to do what you do best - trading. Having earned a lot of money, you will not only be distracted from everyday problems, but also regain confidence and a smile on your face!😉
6. When you closed a losing position, immediately open a new one with double volume to recoup losses
You came into trading to win! So win and never admit defeat! You are Hercules and defeating everyone in the market - this is your 14th feat! No step back, only forward!✊
7. Prioritize Elon Musk's conspiracy theories and tweets over technical analysis
Do you already have the conviction that the Illuminati run the market and every time you open a position and the market goes in the opposite direction, the Illuminati move to harm you? If not, then quickly look at your lost trades. You did everything right, but you still lost money. Why is that? Just don't tell anyone...🤫
8. Believe that trading is luck and the odds are always 50/50
This makes it much easier to make decisions. If black has fallen out on the roulette wheel 2 times in a row, then the chances that red will fall out are much greater. Therefore, do not hesitate to go against the trend, probability theory is on your side 💪
9. Stop exercising your body and mind
You will need neither a healthy body nor a focused mind in trading. You only need your eyes to see “buy“ and “sell“ buttons, you don't need much intelligence for this. Being in the green zone? The green zone is a myth for suckers who engage in self-deception.😏
10. Quit your daily job
Since you already created an account on Binance a week ago, watched a couple of trading videos, sorry, I meant in-depth educational materials, and even have already made a couple of successful trades, then it's time to finally quit that boring job. The road to millions is open, it remains only to take the last step.🤩
11. Manage your friends money
Why getting rich alone? Take your friends and family with you. They will be grateful later.🙌
12. Don't look away from the screen until you've regained every last cent.
Winners don't walk away with losses. Make sure your deposit has at least doubled before ending a session.😎
13. Never fix profits. If it has grown a little, then it will grow more.
Do you remember how you closed the position when the coin grew by 5-10%, and then it rose another 200%? That’s what I’m talking about. Don't close too early, keep trades for the maximum profit.📈
14. Trade at night
If you don't have time, don't give up. There is always an opportunity to earn. Even after a hard day at work.🤜🤛
15. Analyze the market on a 5m timeframe and trade on the 1m.
Opportunities are always there - the main thing is to be open to them.🤞
I hope these tips will help you quickly drain your deposit down and return to a normal life. If you liked them or you are already using them, please click Like and leave a comment so that I understand that it is valuable to you and will continue to write educational materials in the future.✌️
Getting Over the Agony of LossesHey Guys!
When a trader takes a loss, it can be quite hard. It can strip you of your motivation to trade. Or perhaps even sway your quality of life. But that doesn't have to be the case. Do you ever wonder why experienced traders don't have a fit after a loss, whilst beginner traders can go into a chatic godzilla-like tantrum? No, it's not because they're enlightened in some way or simply not prone to anger. It's because they understand what trading is "truly" about.
Trading is simply about refining your strategy and honing it until it is capable of extracting consistent profits from the markets. Moreover they understand that in order to refine a strategy they will have to take losses from time to time. How else will they know if their strategy needs refining or not? Thus the experienced trader views a loss as an opportunity to further refine their strategy and more importantly views these losses as a necessary component to propel their trading to the next level. Now, viewing losses from this perspective, who in their right minds will throw a fit every time they take a loss?
So just some advice to the beginner trader. If you don't have a specific strategy that you're working on and are hopping from strategy to strategy; consider making your own strategy. Of course this can be a mixture of strategies you came across in your trading education, but ultimately the strategy must be constructed with your original signature. This means that you understand the nuts and bolts of the strategy and thus have the ability to refine it when necessary. Once you begin this refinement process, upon a loss and the anger starts to kick in, you'll find that refining your strategy with the lessons learned from the loss will diffuse that anger that erupts inside of you. It will become an antidote that if persisted, will get you on the peaceful road to trading success.
I hope this helps! Have a great day guys!
Ken
Mental Flexibility - Reason WHY people lose their deposits 👀Hello dear community member 🙌
Do you agree that mental flexibility is one of the most important qualities for a trader? Let's discuss:
• Why is it important
• What happens when a trader does not train the flexibility of the mind
• How to develop it and improve your results in trading
You don't need to look far for examples of why this is important. Let's remember the fall of the 21st, when everyone was expecting the endless growth of the crypto and the imminent capture of the world by dogecoin adherents and Elon Musk. What happened to these people after November? They continued to long into the short market and most of them lost their deposits.
Why do our eyes get blurry? After all, a month after the wrong decision, we hesitantly look back and think: "God, what an idiot I am, how could I not see this ?!"
Man was created in such a way as to adhere to a given plan and not deviate from it even a step. Our hairy cave ancestors saw the mammoth and could follow it for days until it separated from the herd and became a convenient prey. If they hesitated and looked from one mammoth to another, their chances of returning home with prey would be greatly reduced.
"If you chase two hares, you won't catch either"
And it so happened historically that we like to focus on one thing and in many ways it is useful - ONE job, ONE family, ONE faith, ONE and the same bigmac at McDonalds. However, in trading you need to be open to alternative opinions and be able to quickly change your own, because this is a matter of life and death of your deposit.
There are a couple of ways to develop flexibility. From the simplest to the most complex:
🏅 Community. By joining the elite club of experts, you will always get a lot of cool ideas and understand the mood of public. It will become easier to make decisions, as well as change your mind.
🏅 Alternative plans. By preparing the main scenario and the alternative one, you show your brain that both options are acceptable for you and subconsciously you will be more open to a change in the wind.
🏅 Meditation. Daily practice of meditation helps to better feel your inner "I", streamline thoughts, weed out the unimportant, and control your own ego.
Choose what you like and let's build a strong community together!
Have something to add? Share your opinion in the comments.
If the post made you think, like it, so I will understand that it was useful for you and I will be motivated to write more. Be sure to write about what else you would like to hear.
The study of the prism of vision 🎓Here an open mind opinion which will be very usefull if you are a beginner, if you are at research of profitable and regular results, if you research something working for you in this game, and for many others. I will not develop any strategies or analysis here (it would be too long), just show exemple of some with, in the end, some advice that you MUST read to perform in this trading.
First I will explain why it came to my mind to make this post and secondly I will provide a deep speech for everyone of you.
If you follow me, you know I provide notably updates on Bitcoin for the moment, my analysis, some explanations about what happen inside the market and some expectations for the future (and signal / trades when there is). Yesterday when I wrote the LDTP #11 (you can find it related to this idea), I explained many technical things and during I was writing the post, market made exactly what I was explaning for and what I usually develop. It gave this masterpiece from market like I called it in the initial post 👇
Here showing most of the knowledge I use in my strategy, you will find on this chart Volume analysis, Volume Profile analysis, Wyckoff Pattern analysis, Resistance / Support analysis, Candlestick analysis, Supply / Demand analysis but it's not what I want to develop here.
When I cleared my chart, I said to myself : " How beginner cannot be lost when we see this obvious triangle that probably others people develop, exploit, trade for and claimed as THE solution in trading ? Which one say true, is it the Wyckoff pattern with the spring or is it the triangle ? " And so I developped this triangle, and others technics, always taking a blank chart arguying around differents technics. Here the result (I don't present it as working strategies, just as other setup, reading and visions) :
Using Support / Resistances, Chartism analysis, Volumes 👇
Using Supply / Demand, Candlestick analysis 👇
Using Harmonic pattern 👇
Using Fibonacci retracements & extensions 👇
Or just using the Tradingview Bollinger Bands strategy 👇
And so, looking to that, I was asking myself : "How peoples can determined which content could be usefull for them when everybody say differents things, claiming for differents technics / strategies, speaking of a same chart ? Who say the truth ? Is this game a big coin flip party ? ". I believe some beginners have already wondered about it. How don't think that when you start here and you see many traders, revendicating as professionnals, saying the exact opposite of the others for some reasons that all seams technically viable.
🔰 So here my answer that you need to read : 🔰
In trading, nobody say true but nobody say wrong also, because there will be always a moment where they will have reason. No strategy say true but no strategy say wrong too, because there will be always a moment where they will have reason. Same as indicators, same as technics, same as ... In the end only market have reason. Don't search to control the market, search to understand it. Don't search to be rich, search to be profitable. Don't search to always have reason / always win trades, but most of the time.
▶️ Don't believe others !
Find usefull content, learn from them, learn from you, but learn. You will never win money by following naively what someone say even more if you don't understand what he say and why he say that. Look at all technics, at all approch, at all strategies you can find in trading, search on these, learn on these, until you find one which will fit with you. You will never win money by applying painfully the strategy of another person. Your mind, your personnality have to show through your strategy. Like there is thousand of assets to trade on, there is thousand way to trade them.
▶️ Grind the market until you apply your strategy/knowledges unconsciously !
Here how your brain work or how you have to make it work : You are unconsciously incompetent, then you do research to experiment new approch of understanding. You find it so you become consciously incompetent, then you learn about it to become better. You force yourself to apply it so you become consciously competent, then you grind it everyday, everyweek, everymonth as long you need for integrate it. When you are finally able to do it naturally you become inconsciously competent, then you can restart with another unconsciously incompetent aspect of you.
▶️ Don't avoid failure, you will fail !
Every trader already failed, at different scales, but this is a fact. This is how work your brain, you learn, then you apply, then you fail, then you learn from it to apply better and to avoid future mistakes. And failure will became less important but you will continue to fail, and you will continue to learn from them. This is how you become profitable. You can block yourself in a state where you don't want to fail, but you will never progress. Failure help to question ourselves, it's an essential step to progress. If you are not able to take a step back from your results, from how you apply your strategy and your knowledges, you will run into a wall, you will loose time and failure will became harder than never.
▶️ Become mathematically reliable !
Today you have the opportunity to test strategies for free, abuse of it. Use virtual money accounts and train for days, weeks, months, years until your strategy became mathematically reliable. By using virtual money and not your own, it will able you to fail, as much you need it. But you will also work on your strategy out of any emotions. Because when you trade with real money you are impacted by emotions, and as you are, your strategy will, and is profitability with it. If you don't do that step of learning and applying far from real money you will lose your time to blame your emotions like the reason why you are loosing money but it's just that your strategy isn't' profitable on long term.
▶️ Work on yourself !
As you have to work on your knowledges to improve yourself, you will have to work on your personnality to win money in trading. You will experience emotions and you will have to learn to control them. If you cannot you will have to learn to don't trade when you feel emotions. Emotions will make you overtrade, deviate from your strategy and so from your profitability in trading. Emotions will blind yourself from your true value, making you better than you are or worse than you are. Emotions will cause moments of intense joy as well as moments of deep sorrow. Frustration, revenge, confidence, motivation, patience, mistakes, pain, sadness, happyness I could quote decades that you will have to deal with, you will fail because of them, you will tilt, and you will have to learn about it again. Speaking of pacience, this is the major mistake of beginner for me, if you are not able to put your ass in a chair and look at market without taking a single trade during a full day, you don't trade for the good reason : you trade to feel emotions and not to win money. You are not looking the market to find entry, you are waiting the market to give you an entry : weigh the meaning of these words. And if you had doubts about it, you won't be rich tomorrow from trading because you read this words, but it can give you answer to achieve your goals.
▶️ Open your mind !
Like I showed there is many technics in trading, explore them ! That don't mean that you have to use them but you have to understand what exist, why some can be usefull in some case and not in other ... Also open your mind to other's plans, admit that you could say wrong and that you could think wrong. Another mistake that some do : don't explore only one way, don't think because this indicator say "..." that market can go only here "...". Take a step back, create scenarios that the market could follow and search in these which one you could exploit. Market cannot surprise you if you do this job, become proactive and stop being reactive. You will see that the emotional charge will be less important. But don't confuse, that don't mean you anticipate the market, you just imagine what he can do. Never anticipate the market, or you will lose money.
⚠️ To finish,
I made a statement in one of my past ideas that I want to reiterate : "Whatever your strategy, whatever your indicators, whatever your amount of knowledges, if it is mathematically reliable it doesn't lie but premiums scams lie. Doesn't matter who you want to follow, who you want to support, who you want to believe, always verify that he doesn't provide public payable services where your person serv his own interest. That probably the best advice I can give you. You will need to surround yourself to progress in trading, that a fact, but don't be the food of this guys."
Saying all that, I hope you understand now that trading isn't a question of "this indicator is better than this one", or "this strategy is the best way to ...", no it's just how you use it, how much you trained for, how much you grind to handle it. If you had to remenber only a sentence, use this one :
"Making money in trading is math and respect of strategy, so never let your emotions guide you in uncomfortable positions"
If you arrived to these final words I think it's because you want to improve yourself and I promise you that you will succeed if you put the amount of work necessary. It will not be an easy path but nobody said that it will be simple, except those who earn money from you.
There was so much things to say that I probably forgot sometimes what I wanted to say, and there is always at least as much to say. Maybe one day I will do another chapter but for the moment :
Like, follow or comment* if you like, I need it to continue !
*Speaking of comments, come ask questions, come share your point of view, come debate, I need it to feel that my without counterpart work is usefull for some !
How to continue in trading during uncertainty timeHello traders:
Recently I received many messages from traders about taking many losses during this uncertain time.
What's going on globally right now may have a different impact on all the different markets.
Many have told me of your frustration, stress, and negative emotion on losing money and continue to feel defeated.
Today I will explain a few things that you can implement into your current trading plan,
approach and perspective during this period of time.
First, you must acknowledge risk management.
Too many traders ignore this key important aspect of trading.
Especially during this time where the market can be volatile and irregular.
It's in your best interest to understand how to manage your risk. You should have a plan that lists out how your approach would be.
For example for my risk management right now:
-1% per trade of account capital.
-No more than 1 trade on the same currency, unless the first trade is secure in profit.
-No more than 2 trades open during a day, max drawdown 2% per day
-10-15 trades per month
-3 trades maximum per week
-Minimum 3:1 RR allow before entry
-Will Take profit on average when in profit 3:1 RR.
Second, learn to control your mindset and emotions.
More often when traders approach me these days, they are telling me they are taking too many trades, chasing profits and revenge trading their losses.
All these arise from the mistakes of FOMO, get rich quick mindset, enter multiple trades.
IF a trader can truly understand the fact that the market will always be there tomorrow, next week, next month..etc, then it's an easier thing to deal with on a psychological level.
You will no longer stress about trying to enter too many trades, worry that the market may not be available tomorrow.
Third, less social media exposure.
In today’s world, unfortunately in trading, most of the things you see on social media are fabricated and fake.
Their sole purpose is to sell you a dream, lifestyle, and easy money concept.
ITs always during this uncertain time, you will see more and more of these “gurus” who will show you how much $ they made during this time.
Now, I am not saying all are fake or scam, I am sure small # of them are doing well.
But, most of the things you will see in your social media feed, are likely to be photoshopped, faked, fabricated to make you believe whatever you are doing is wrong, and you tend to “compare” your result with these people.
This ended up becoming very negative and stressful to continue.
ITs important to understand trading is one of the toughest professions out there.
IT requires so much emotion control, clear mindset, and proper psychology on a regular basis.
If you are struggling, it's usually not to do with your trading strategy, but rather your approach, perspective, and perception.
So, eliminate as many unrealistic things you might see, and focus on yourself and your journey.
Any questions, comments or feedback welcome to let me know.
Thank you
DROP IN TRADINGHello!
Today I want to talk about drawdown in trading.
This topic is very important because it is directly related to the possible loss of all capital.
What is a drawdown?
When trading, you can make profits as well as take losses.
When you lose too much and the account decreases significantly, this is called a drawdown.
Losses in trading are normal and should not be feared.
But you should not lose too much, a minus of 15-20% is considered a moderate minus value, and these losses must be controlled.
Drawdown (DrawDown, DD, drawdown) in the foreign exchange market is a temporary decrease in funds in the trading account as a result of opening a losing trade.
In simple words, a drawdown is a trader's floating or real loss.
Drawdown types
In the Forex currency market, it is customary to classify the following types of drawdown:
The current drawdown is a temporary drawdown associated with an open position, which is now in the red.
The size of the initial deposit does not change until the position is closed.
As a result, the position itself can be closed even in a plus, but if the position goes into a minus, you should think about the rules of money-management.
Because a position not closed in time may end up with a margin call.
A fixed drawdown is a position closed with a loss.
This type of drawdown negatively affects the size of the deposit, reducing it.
If money management is not used correctly, such transactions can significantly reduce your deposit, which is not recommended.
Maximum drawdown - the maximum value of deposit losses for the entire trading period.
It is calculated each time from the previous maximum deposit amount, and the largest value is selected.
For example, there were three big minuses on the account: $300 with a $1000 deposit, $450 with a $2000 deposit and $200 with a $2500 deposit. The maximum drawdown here will be $450.
Relative drawdown - the maximum decrease in the account relative to the initial deposit, expressed as a percentage.
It is often used when analyzing a trading strategy in order to understand after what losses a trader should think about changing the strategy.
For example, if the relative drawdown is 20%, then with an initial deposit of $1000, the speculator will understand that it is necessary to close deals and modify tactics when the current drawdown reaches $200.
The absolute drawdown shows how much the balance has decreased relative to the initial value. These data are similar to the relative drawdown, but are expressed in the deposit currency.
Why analyze losses?
Each trader should know how much he is ready to lose and at what value he needs to change the strategy and start trading a little differently.
The percentage of allowed drawdown is different for each trader, conservative traders try to minimize the maximum drawdown, more aggressive traders take risks much more often and in large volumes.
Large companies keep the maximum loss in the region of 15-20%.
Optimal drawdown size
The optimal drawdown size varies depending on many factors: the type of strategy, the amount of the deposit, the psychology of the trader, the timeframe, and so on.
Drawdown can be divided into three types:
A drawdown of 15-20% is working and quite normal. It can be restored, and it does not make strong adjustments to the trading strategy.
A drawdown of 21-35% is a dangerous level of losses that will require a reduction in the volume of the trade and recovery can be difficult. Closer to the 30% mark, it is important to think about modifying the trading strategy and review it for errors in the risk management system.
A drawdown of 36-55% is an actual harbinger of a loss of a deposit. It is better to close orders and think about what led to such a drawdown, which was not closed forcibly earlier.
Drawdown reduction
Setting a stop loss - and its size should not exceed 5% of the total amount on the trader's account.
Optimal leverage - the use of a large amount of leverage can lead not only to drawdowns, but also to draining the trader's deposit to almost zero.
Refraining from trading in an unstable market - very often a trader, observing even the first two conditions, still manages to lose almost half of his own funds during one session. Therefore, if you have made several unsuccessful transactions in a row, then it is better to give up trading for today and do something else.
Correct assessment of probable profit - one should not be greedy when placing a take profit, its size should always correspond to the market dynamics.
conclusions
Every trader who wants to consistently earn money in the market must understand how much he is ready to lose, while the trader must do everything not to lose all his capital.
You can lose 15% per month and it will not be scary for a trader who follows a trading strategy, money management and monitor losses.
As a result, such a trader can return the lost next month.
But those who do not follow these rules, do not think about a drawdown, do not know how much they are ready to lose and how much they cannot lose, as a result, everyone loses.
Losses are inevitable, but don't let the market take everything.
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩
