How To Handle The Ups And Downs Of Trading For A Living – August 2016 Review
One of the most difficult aspects of becoming a full time forex trader is dealing with the ups and downs that come along with it. The fact is no full time trader will go month after month without at least having some break even or losing months. This was out 16th month end review and it is our first month that was not positive. For the month of August 2016 we ended the month at break even. Being break even for a month can cause as much psychological stress as a losing month. The fact is, it’s only natural to feel like the month was wasted when you end it break even. This is where mistakes can begin to wreak all the progress you might have made prior to that month. The logical question is thus, how do you deal with it? Here are 3 tips to help deal with negative or break even months as well as the video covering all valid trades for the month of August 2016.
1.) Have Your Long Term Goal In Mind: Its been said that, ‘if you fail to plan, you plan to fail’. This statement has never been so true as it is in trading. Let me ask you this question. What is your long term goal as a trader? The vast majority of people will have a generic response like, “I want to replace my income and trade full time” or something along those lines. While that is a start, it is not specific enough. If you look back through history you will see that anyone who was truly successful in their chosen field was very specific. They often talk about envisioning their end goal as if it was already achieved. This starts with knowing EXACTLY what you want to achieve and how you plan to get there.
When you are making your long term goal you should have exact numbers in mind. What do you want to make per month EXACTLY? With this point in mind you can move on to point number 2 which is very similar.
2.) Have An Exact Plan To Reach Your Goal: Once you have a goal you can start making plans to reach that goal. Again, this is a topic that most people approach with ‘broad strokes’. My personal recommendation is to sit down and write out by hand what your starting account balance is and compound that balance by your expected monthly growth percentage. If you want to make +10% per month then sit down and write out the ending balance if you were to take your account and compounded it by 10% per month. Again this is just an example figure and you can input your own number based on your personal risk tolerance and forex trading strategy.
3.) Be Realistic: Most people come into the world of forex with dreams of grandeur. They see brokers that allow 200 to 1, 300 to 1, 400 to 1 or larger leverage and they think they can turn a few hundred dollars into a few hundred thousand dollars in a few short month. The fact is trading doesn’t work like that and if you have been trading for a few months you have already started to come to terms with that hopefully. With that being said you can become a successful trader, but you cannot follow in the footsteps of the masses and expect to achieve different results. By giving yourself a realistic long term goal you set your sights on a what your account will be a few years down the road, not what it will be next week. This has a massive psychological impact that can help you overcome a losing or break even month.
As an example. Lets say you start out with a $5,000 account. If you were to gain 10% on a $5,000 account you would have roughly $155,000 by the end of 3 years and well over $1,500,000 by the end of your fifth year of trading. Most people look at that and think that growth is too slow and there in lies the problem with their perception. Only you can determine whether the work and time is worth the effort. To me the greatest risk and/or loss is working away the best years of your life until you are 60-70 only to retire when you are too old to enjoy it. In my opinion, whatever effort is required to enjoy life now is well worth the effort. With that being said only you can make the decision. Enjoy this months video!
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