One of the major reasons traders struggle to make consistent gain is that they fail to appreciate where they are in their trading journey and they keep looking over the fence for what is not missing.
Everyone is in a rush to make money off the markets and very few really give Forex trading the attention to the process it requires to be consistently profitable.
You may likely be among those traders who are rolling in the cycle of doom without even realizing it.
In this article, I’m going to share with you what it means to be in the cycle of doom and how to get out of it. It is in your own best interest to read through it over and over again, save the post and think about it through and through.
What Is The Cycle Of Doom?
Simply put, it is engaging in a negative behaviour over and over again and expecting a positive outcome.
It is a frustrating and an unhealthy approach to achieving good results in any field whatsoever .
In Forex trading, there are activities or behaviours that you engage in that are clear signs that you are operating in the cycle of doom.
This is how you know that you are operating in the cycle of doom.
After you have learned a trading strategy, either by developing it yourself or learning from a trader somewhere, you apply it immediately to your trading.
Then you start to make money off trading that system. After a short while of trading, you get into losing streaks with that pattern.
You begin to doubt the strategy and you start to tweak it by probably adding more indicators or completely changing and going to learn a new trading system.
So you go over the process of
…….learning a trading strategy…….applying the strategy to your trading…..making profits off the strategy…….losing streaks set in……you change your trading style again and you go learn a new trading strategy or you go on the internet to get another mentor or trading course. Then you go through the cycle again.
This is a vicious cycle of doom that leads to nowhere.
You need to understand that every trading strategy no matter how profitable it may seem has a losing period. Failure to accept this reality is the SINGULAR reason why a lot of traders are stuck in unprofitability. Everyone wants to make money, no one wants to lose. It does not work that way.
How to avoid the damaging cycle of doom
1. Have realistic expectations
You cannot come into trading expecting to make 50% of your trading capital in one trade every single day or even in a month.
It’s more realistic to compound a profit interest of about 3-5% monthly. Run away from mentors who claim to teach you how to make even 10% profit daily. You will do a lot of damage to your trading account if you go that route.
Throw away this mentality of wanting to get rich quick. In this game of Forex, 90% of the fast and furious traders lose while the slow and steady wins consistently.
2. Understand that trading is a game of probability; Have you ever wondered why the Casino always makes consistent profits in the long term?
They understand the game of probability and have sampled their edge over a large number size in a long period of time. The Casino owner does not fizzle out when negative results come in because he knows that he will still come out profitable over a large amount of attempts.
Trading is the same. It is a game of probability. Have an edge(trading strategy) and allow it play out without you giving up on it when the losing streaks come
When you have traded a particular strategy over a long period of time, your record of both the winning and losing trades will help you to know if it is a profitable strategy to stick with.
Give your strategy time to play out before you go jump on another trading agenda.
3. Back test your trading pattern
When you learn a new strategy, take some time to back test it. That is, go through historical data for a given period of time to find out how the strategy played out in the past. This will help you know how profitable your trading strategy is.
4.Demo Trade
After you have learned, developed and back tested a strategy, you need to open a demo account and trade only that strategy for at least up to a 100 times. As you do this, keep a record of the outcome of each trade. Once you have gathered at least up to a 100 trades, do a review to find out the ratio between the winning trades and the losing trades. If it turns out to be profitable, it will develop your confidence to trade it even more. In the case where the strategy is unprofitable, you can discard it. Doing this on a demo account will help you trade in a more relaxed manner instead of testing the strategy with your real money on the line.
Stick With Your Trading Plan
Develop a trading plan. Once you have created a trading plan, ensure to stick with it through thick and thin. Do not be in a haste to learn a new strategy when the losses come because the losses will eventually come. If you do your due diligence to back test and journal your trades, you will not need to panic during losing periods.
In conclusion, don’t be a jack of all trades and a master of none. Learn one or two profitable strategies, apply it consistently and you will see your trading career soar to the top.
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