Is it always worth continuing to trade after a loss?
Last week, I was faced with a situation where the first trades were unprofitable. I I have closed losses of -83.3 and -83 pips, but at the same time I was able to make a profit in the end.
But is it always worth continuing to trade after a loss?
Well, I have found an algorithm that helps me to find a solution.
If I had to close the losses and I realized what my mistake was, then further:
– I analyze my mistake
– I calculate possible risks taking into account my mistake
– I compare the results with the previous ones (before making unprofitable trades)
– if the estimated risks do not exceed the estimated profit and the trade is strategically justified (a set of indicators, trend analysis and news analysis), then I enter the market.
If I see that the risks are too high, or my mistake is fundamental, associated with the basic points of the strategy, then I wait until I carry out a full analysis and I’m ready to evaluate the risks correctly.
Perhaps many traders will be interested in where is the work with psychology and emotions after losses. My answer is: I do not consider losses as a destructive factor, but as a chance to correct mistakes that I experieced. I accept them and understand that they are part of the trading process.
The greatest emotional instability occurs during a succession of victories, not when there is a succession of losses. Because the mind loses focus with such a relaxing background and tends to make wrong conclusions.