Raising the standards of a professional and successful forex trader is not an easy task at all. The whole process requires not only a lot of time and knowledge, but also a considerable amount of commitment, which motivates traders to stay in constant trade circles even in the most difficult moments. To become a successful trader, it is very important to strictly adhere to the chosen trading strategy and see whether anything is really working. The Forex market is so fast and volatile that it is up to you to think about each subsequent trading step as if it were the last one.
Trading without a good strategy is like a lottery bet and the easiest way to lose the entire or desired amount. Unfortunately, even the best-looking trading strategy is not omnipotent, so there is a need to have a backup plan that includes a backup trading strategy (entries, exits, and various market orders) that will fill in the gaps of the primary trading strategy.
As seasons alternate on Earth, different trading periods alternate in markets. Professional traders use different primary trading strategies according to these periods, and when the market demands it and there are no other options, they activate their backup plan, where traders usually deploy their backup trading strategies.
Never worst Day cost you
Every trader has their bad days in his trading experience. As a rule, never let a bad day cost you more than you make on an average profitable day. If you average $700 on your winning days, don’t lose much more than that on a bad day. Control the downside.
A big loss causes all sorts of inner conflict a need for revenge, fear, anger, frustration, self-hate, market-hate, and the list goes on. After a big loss, there’s no way to trade with a clear head. There are more than 250 trading days in a year, so there is no rush to get back in there; today is not the day to make it back.
Accept Responsibility
Maybe it was just a bad few days, maybe it was your biggest single loss ever, or maybe it’s a life-altering loss. In the latter case facing financial ruin there isn’t much to do. Don’t trade until the issue is resolved. Once it is, then you can proceed. If you have drawn down your account, had a losing streak, or suffered a big sudden loss, that’s different.
You’re still in the game, just a little beaten up. Everyone loves a comeback story, and every trader who has been around a while has one (or several). It doesn’t matter if a surprise news announcement caused the price to blow past your stop loss, or a technology meltdown caused you to lose your connection and the market moved against you.
Practice and Rebuild Confidence
After a big loss, confidence can be low. That means the mind may not be right for trading. Not having a clear mind can cause you to skip trades, panic out of trades (trading not to lose), or be overly-aggressive in an attempt to get back to your old winning ways quickly. None of these are good. Take a step back and trade in a demo account for a few days. If you have been losing, you will likely save yourself money.
Because it’s not real money, there is also less pressure in a demo account, so it is easier to focus on trading, and not worry about the financial aspect of it.
The main steps needed to create a backup trading plan (strategy):
Change your Mindset
The first and main step is to admit that, despite highly disciplined trading, the primary trading strategy may fail. It looks easy, but it’s really harder than it seems! It is mainly related to the ego and the functioning of today’s society, which is set to expect from people the best and flawless results, and we often refuse to admit that plans and strategies would not work.
Create a backup plan
Creating a backup plan does not only mean creating a backup strategy, but a plan is a set of activities to help achieve a goal. Therefore, a backup plan is such a plan where the trader precisely determines under what circumstances certain measures will be taken. The easiest, and perhaps somewhat ironic, most effective creation of a backup plan is by using the phrase “when -> so”.
Example: When something happens on the market, that back plan need to respond. And, in the context of the backup plan, it should look like this. When the primary strategy fails this way, it will activate the backup plan.The backup plan is then nothing but a set of trading conditions and subsequent entries and exits from trades.
Managing and updating the backup plan
If there is a backup plan where it is clear from a simple analysis that its conditions are not feasible in the current medium-term time horizon, then such a plan is not very usable. Therefore, it’s a good idea to update the backup plan once in a while to check its relevancy.
A backup trading strategy should include:
- is fundamentally different from the primary strategy
- easy to use and understandable
- tradable on the same timeframe as primary trading strategies
- If it’s possible to create stress-free Strategy for trader.
Trading without a backup plan and strategy can be very risky and unprofessional, so do not repeat the mistakes of your predecessors.
Conclusion
If you’ve just taken a big hit and stopped to trade for a couple of days and do look at your trades, Your trading plan and address your issues. Why it’s happened and also make an change in necessary trading plan. Practice in a demo account to build a confidence upon your strategy. Only switch to live account once the confidence rise in your mind when you made some profitable days and are feeling more like your old trades.
