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How To Keep Hold Of Your Profits

Discussion in 'Forex Discussions' started by painofhell, Jan 3, 2016.

  1. painofhell

    painofhell Content Contributor

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    WINNING TRADES – How To Keep Hold Of Your Profits
    It is very common to read about how losing trades can have an adverse effect on your trading and how hard it can be to get out of a rut. The question I want to raise in this article is whether or not it is possible for winning trades to also produce adverse effects on your trading?

    It may sound like a crazy question to ask, as we would all agree to make profits we need winning trades, obviously!! But it is a serious issue that I would like to address.

    How can winning trades be destructive?
    First and foremost, a winning trade provides us with “PROFIT” and this is why we trade the markets – to make money, right?

    However, once banking profits the hardest part is keeping hold of it.

    As with all aspects of Forex trading, problems arise when we let our emotional state get involved in making trading decisions.

    The common emotions which must be controlled after a winning trade are:

    • Over- confidence: understanding one winning trade doesn’t make you a profitable trader and making sure you remember trading is just down to taking high probability setups consistently and putting the odds in your favour. Your confidence should grow as your account grows based on an accumulation of trades, not after just one winning trade. Over confidence can also encourage traders to risk more on the next trade but these temptations must be ignored. Maintaining the same % risked per trade is very important, no matter what happened in the previous trades.
    • Impatience: the ability to hold back and wait for the correct trades especially after a winning trade is tricky. The attraction to get back into a trade straight away to regain the sensation of victory can be a dangerous urge. Staying very picky and making sure each trade meets your setup criteria is paramount.
    • Greed: this powerful emotion feeds the first two emotions listed above. Keeping greed in check is simple – Don’t be greedy!!!. Sounds simple but it really is, we all know when we are taking too much risk or pushing the boat out too far. Being completely honest with yourself and having good discipline and rules in place prevents greed growing. Greed, if uncontrolled will always end in disaster.
    All these emotions can disrupt a traders ability to make well analysed, consistent trade decisions and if uncontrolled will produce an inconsistent approach to trading.

    For a trader to become profitable they must be able to gain profits and keep hold of them over a number of trades and to produce these results consistently. Having a steady emotional state throughout your trading life will set you apart from the struggling traders, who think they can out think the Forex markets.

    Keep your feet on the ground!!!

    The feeling of achievement when a trade converts into a nice profit is always going to produce a positive sensation but allowing the sense of victory to go to your head can have adverse results on the decisions you make after the event.

    The traders who understand that winning and losing trades are pretty much the same with the only difference being the outcome, are the experienced traders. These traders will not be effected emotionally by their trade results and will be able to continue making consistent trading decisions no matter what has happened in the past.

    On the other hand, a trader who feels like they are on top of the world and almost invincible after a winning trade will encounter problems. They will probably feel the need to recapture the feeling of victory by forcing themselves to enter another trade, even if it doesn’t quite meet their set trade criteria.

    The sad truth is that this trader will more than likely find themselves giving back the profit they pocketed from the previous winning trade and be back where they started. But in a worse mental state with a sense of frustration and annoyance that the markets are playing unfairly.

    If at any point you yourself start blaming the markets for your poor results, a complete reassessment of your mind-set is required. Transferring the blame for poor results is neither constructive nor will it change your future results.

    Controlling your emotions
    To combat the common emotions highlighted, we must simply understand they exist and be aware to keep them in check. Every trader will experience these emotions but the traders who can control their emotional state after each trade are the ones who trade with a steady hand.

    It’s almost like we need to reset our mind set after each trade and forget the previous results. So we can refocus on the key areas that make a trade setup valid.

    Trading the Forex is always going to be a battle to control your emotions and having set rules to guide you on making trading decisions is the simplest solution.

    Trust in your trading plays a huge role and being confident enough to let the trades play out and mentally strong enough to deflect any negative thought processes will keep you making the right choices, consistently.

    This article has hopefully gone through how we obviously need winning trades to grow our accounts but to also explain the emotional pitfalls that can arise from winning trades. Holding onto those profits gained and not giving them back to the markets straight away is definitely a challenge. As long as you can stay in control of your emotions and prevent previous trade results effecting future trading decisions, you will have a great chance of succeeding.
     
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