Get Back on Track After Blowing Your Trading Account!
Every day, humans are confronted with a normal sense of discomfort, i.e. fear. As a result of the fact that Forex trading is still a relatively high-risk endeavour, many traders, both novices and veterans alike, are forced to confront their anxieties while intensely engaging in the market. Are you capable of getting entirelyrid of this sensation and becoming a trader who never has any worries?
This could be the rare. It’s a different story when you’ve conquered your fear of failure. But for others, there is undoubtedly an approach to lessen the dreaded impact and build up your tolerance. You need to understand that fear is not almost as detrimental to traders as its scorching effects: fear incapacitates quite a bit but a small amount is naturally healthy.
A trader’s worst nightmare is to lose all of their funds! Dropping by half is never a pleasant experience. You may feel like throwing up, frustrated, disturbed, wrecking everything that’s nearby. You could have even been on the verge of a breakdown altogether.
Accounts that have been overdrawn are a sad reality, despite the discomfort they cause. In light of the recent wild market swings (volatility), I’m certain that many traders are now facing significant losses or perhaps even out wiping their entire trading accounts.
To be honest, when I initially began, I, too, had to operate many funded accounts. Not astronomical quantities of money, but just enough to cause some ripples. I agree it’s a tough profession, and no one gets away with anything. Trading losses are a kind of education in and of themselves. Those who prefer to invest in their trading education have the fortunate outcome of experiencing a lower rate of financial loss throughout their active trading lives.
Instead of hiding your head in the sand, remember that wiping out an account is more common than you may think. According to popular belief, 90% of traders lose money (go bankrupt) during their first year.
During the length of my trading career, I have been responsible for blowing my fair share of accounts and violating every single one of the seven deadly trading sins. Failure to adhere to a defensive strategy, lack of self-control and revenge trading are manifestations of poor decision-making.
Having a winning attitude is an integral part of your triumph, alongside honing your ability to devise superior trading methods and conduct more in-depth market analysis.
Should you find yourself in the unfortunate position of having your account blown, the following three efforts will assist you in regaining control of the situation.
Take a deep breath and take a step back
It’s not uncommon for people who lose money in the markets to have second thoughts about continuing to trade. As for the former, now is the moment to slow down a little and not rush things.
My respect for your strength of character is tempered by my fear that your emotions will get the better of you sooner rather than later. That blown account is a red flag to sincerely pinpoint where things went wrong. Sometimes, it acts as a good reminder to hold off before making a move.
On the other hand, understanding a red sign is what’s needed. A problem has been detected and it’s trying to let you know about it via several means. What you did to cause the account to go up in flames isn’t going to happen again. There’s no need to begin anew but you might consider making some alterations. Take a trading sabbatical and your absence from trading will change the whole complexion of the game.
It gives your emotions a chance to calm down, which paves the way for you to concentrate on finding solutions to the hardships. A minimum of one trading weekend is what I’d suggest you start with. If you do not fulfil this threshold, the possibility of revisiting this unfortunate event rises.
I assumed there would be no trading or chart-viewing for the following seven days. In those days, either spend time with your loved ones, take in the beauty of nature, or pick up an unexplored hobby, but step away yourself from those charts for your peace of mind.
Learn from your mistakes and accept your losses.
To begin the process of healing and getting your life back on track, you must first acknowledge that you’ve messed up and that you may need to start from scratch. Some traders succumb to pessimism, believing that they would never be competent enough to make a consistent profit. Professional traders persevere despite their challenges and attest that the trading industry is fraught with risk.
“Whoops! Where did I go wrong?” or “Was there anything I could have done better?” is the question you should be asking yourself, as soon as you’ve confronted the terms that you’ve lost all of the funds you have worked diligently to acquire.
This is not the moment to mope about and question your abilities but rather an opportunity to discover new things, develop and evolve yourself as a trader. You will most probably find the solution in your trading journal—this is your godsend that acts as a saviour. In this case, it is presumed that you hold one and have been conscientious enough to document the attributes of every trade you have taken.
Overleveraged is perhaps the best word to describe what happened to you. Were your transactions carried out as per the trading strategy you materialised? If so, are you satisfied with your current trading strategy? Do some back and forth analysis about what went spectacularly wrong and how to prevent it from transpiring again.
A profitable trade career requires a predefined set of mindsets, beliefs and personality traits. Even though (traders) who have dabbled in trading employ worldly-wise trading methods and systems that have been meticulously crafted, a substantial number of traders consistently incur losses despite their best efforts. Only a select few traders have dominated the art of consistently outperforming the market because they have adopted the proper demeanour.
Acknowledge the core and devise a fail safe remedy
In terms of the practice of getting recovered, this is going to be the most challenging portion. 8 years of toiling with hundreds of traders have revealed tribulations with the trading market, inadequate awareness and an inability to control one’s emotions, are the only 3 components that lead to substantial losses.
In the uncertain event of a system failure, you cannot be held responsible for the resulting loss. Your aspirations of being a great trader will either be realised or lost by the actions you do in this phase.
Developing a strategy to ensure that such gloomy times do not occur again should be your top focus in the immediate future. You’re all geared up and ready to battle once more. You can’t trade with the same lot sizes as before. You will not get it until you put forth the effort. You should begin with a small portion of the money and demonstrate consistent returns for at least a month.
The thought of losing should not paralyse you but your position sizes should not be so undersized as to make trading seem like a joke to you. It would be best to strive for a 50% victory rate and a profit factor of more than one. As soon as you have overcome this obstacle, gradually bring your position up.
What It All Comes Down To
Just one more piece of personal advice: Don’t let yourself become disheartened. You need to have undergone some transformation at this point. Your understanding of managing risk and trading behaviour has been elevated to a new level.
You don’t see trading as fun or silliness; rather, you consider it a business. Becoming a diligent trader is a significant achievement, even if it takes some time before you start seeing the fruits of your labour in boosting earnings.
In the absence of self-belief, no one else will to believe in you. Keep moving on despite the setbacks you’ve encountered.
