Direct from the desk of Dane Williams.
Normally I answer questions here on my INLEO blog, but today I want to talk about one of my favourite forex trading concepts as a statement.
I’m firmly of the opinion that in forex, taking a loss is actually a win.
Now I know that this notion sounds fairly counterintuitive, but it all depends on how you look at your losses.
This is actually a perspective that experienced professional traders embrace and they do it for good reason.
Taking losses as a forex trader is an inherent part of your journey to consistent profitability.
Without losses, it is impossible to make money over the long term.
Big statement, I know, but it’s true.
Instead of viewing losses solely as setbacks, I’d encourage you to look at taking them as you successfully being able to manage your risk.
I can go on and on here about learning from your losses blah blah blah, but that’s not really what I wanted this blog post to be about.
You’ve heard those generic answers all before.
For me, it’s about getting you to fundamentally alter your mindset to viewing losses as one of the most important parts of your trading strategy.
The whole goal of having a trading strategy is to plan your trade and trade your plan.
If you’ve fully tested your trading strategy to the point that you know it will make you money in the long term, the outcome of each individual trade is largely irrelevant.
Obviously you want to win, but taking a big picture view and being able to shut out the noise of each individual trade is how you need to view your account.
Speaking of risk to reward, the retail trader’s mindset is to simply try to achieve more winners than losers on your account.
A higher win percentage if you will.
But that is completely irrelevant to your true long term goal of making money.
It doesn’t matter if you’re right more than you’re wrong, all that matters is whether you make money.
And the only way to achieve that over the long term is to make sure that your risk on every trade is skewed in a way so your winners are always bigger than your losers.
Ideally by the largest margin possible.
Something that can only be achieved by forex trading with closed risk and open reward.
The fact of the matter is that big forex traders take losses and they do so because taking them means they make money over the long term.
Being profitable is all that maters!
So with that being said, I’m going to again encourage you to embrace losses as part of the journey.
Of course recap so you’re able to learn from them, but ultimately start viewing your account from a high level.
Taking losses is imperative for the long term consistency you obviously crave.
Best of probabilities to you.