We naturally don’t like to talk about losses. Let’s face it! Despite all the talk about managing our trading psychology, there’s a part of us that wants to win every single time! Even I, as a seasoned trader, sometimes have to acknowledge this part of me.

The fear of loss tends to manifest itself in two ways.

1) After entering a position, many traders who refuse to lose will move their stop-loss points very far away from their entries. As such they may lose more than they should in the end.. Some traders even go to the extent of not placing a stop, believing that the price will somehow come back and hit their profit targets. The problem with doing this is that the process of waiting for that to happen can be very agonizing. It may take days, weeks, or months! In the meantime, your losses can increase very quickly! It’s certainly detrimental to your trading psychology!

2) Another way in which the fear of loss manifests itself for some people is that the trader becomes overly conservative. Everytime a trade opportunity appears, such a trader becomes very hesitant, and is very worried about whether the trade will turn against him if he enters it. As such, very often he misses many trade opportunities.

Losing trades generally set in motion a series of emotions in us, e.g. denial, anger, depression and finally acceptance. The goal is to get to the last stage, i.e. acceptance, as quickly as possible.

The more emotionally controlled you are, the less likely you are to be overwhelmed by denial, anger and depression. You will not allow yourself to magnify the impact of any particular loss. You’ll know that in the grand scheme of things, this particular loss doesn’t mean much. You’ll know that it’s fine to lose when you followed the rules (On the contrary, if you keep winning by breaking the rules, you should worry instead of congratulate yourself!).

It cannot be over-emphasized how important it is to be in control of our emotional responses and behavioral patterns when we are trading the live markets. Many aspiring traders are very soon “filtered out of the game” not because their strategies are bad, or that they are not intelligent enough. It’s really a matter of recognizing and followiing certain timeless principles of trading. I believe this is what makes me stand out as a successful trader.

Too many people run after the “secret” or “holy grail” strategy that supposedly can capture every major market trend and profit from it. The truth of the matter is that no strategy can capture evey move, and that no strategy can be 100% profitable!

Very often, when my students  ask me why a particular trade failed, I am able to point out reasons for the loss; it could be that the entry was too late, or that not all conditions were ideally fulfilled, or that entry was done too near a major news event.

However, there are times when the entry was ideal in many ways, but the trade still failed! In such cases, all I can say to them is, “It’s part of the game, my friend!”

Yes, we must accept that losses are just part of the game! Remember the wise saying: “I would rather follow my rules and lose, than to break my rules and win!”

Every method has its limitations. What I have done over the last 5 years is simply to consistently use (with discipline and proper money management) strategies that produce more wins than losses in the long run.

Because I have been systematically doing this over and over again, I have managed to consistently profit from forex trading. Compared to many of my friends who are holding top positions in MNCs, I am making more money and spending far less time and effort doing so!

When I think about it, I couldn’t be more thankful. Having developed a recession-proof skill, I know I am far ahead of most people! I certainly hope to see many more people joining me

Trading full-time does sound risky to many people. However, I always tell people that as a full-time trader, I remain a rather risk-averse person. Doesn’t it sound contradictory that a risk-averse person can trade forex full-time, and rely on no other sources of income?

The way I define risk is different from common perceptions of risk. Whenever you hear someone remarking that, “It’s a risky thing to do!”, what he really means is that there’s a high chance of failure, because many (or most) people have failed in it!

To me, risk comes from not knowing what you are doing.

As such, even investments that appear very safe, e.g. buying and holding stocks of large and reputable companies, can be very risky if you only rely on hearsay and public opinion, because you could be going in at the end of a trend, i.e. near a long-term reversal.

On the contrary, something that appears risky, e.g. options trading or forex trading, need not be risky if you are trained to do it systematically with good discipline and strategies. This is why I have been consistently profitable in forex trading over the last 3 years (every month has been profitable). The fact that I can be profitable consistently, in a relaxed and hassle-free way, shows that it is not risky for me anymore. The risks are still existent, of course, but they are very much controlled and minimised.

I always tell aspiring traders among my students that whether you can become a consistently profitable trader is not a matter of high intellect or good qualifications. Very often, it takes no more than mere discipline and perseverance to become good at this business. It is truly a worthwhile skill to master, for it allows you to remain profitable despite the economic climate, i.e. it is a recession-proof skill that cannot be taken away from you!