Three stages in trading: Losing, breakeven and winning
By Story Agencies, March 29, 2022Proficient traders have to undergo various stages of learning in the trading industry, similar to the traditional education system. The market demands traders to go through these levels to achieve success.
In this process, the stages of losing, breakeven, and winning can be compared to school, college, and university. To achieve consistency in trading, one must work hard and acquire knowledge and skills to manage risks, control the mind, and eliminate bad habits. It’s also possible to accelerate this process by seeking guidance from a mentor. Nowadays, forex brokers such as HFM have tons of free educational materials that you can use to become a consistently profitable trader and soar through all three essential trading stages.
The concept of losing in trading
The idea of losing may look foreign to most novice traders as they enter the markets due to get-rich-quick schemes. Here is a summary of what losing may mean to most:
Capital. Some traders will only quit when they have entirely depleted their accounts and have no resources to support their trading. They are often forced to leave the markets, even if they do not want to.
Quitting. After finding it hard, some investors may decide to quit trading altogether. Interestingly, 90% of traders quit within the initial 90 days of their career. Traders who consistently experience small or large drawdowns fall into the losing category. Although a few traders might occasionally win or hit a big jackpot, they often lose it all due to their inability to control their emotions. These traders take excessive risks on a few positions, leading to further losses.
How can you transit from losing to breakeven?
It’s important only to risk 0.5 to 1% of your total portfolio equity to prevent excessive losses. Avoid changing your trading strategies too frequently and stick to one plan for at least two months before making any conclusions. Consider reading books like “Trading in the Zone” and “Trading Psychology 2.0” to help address any psychological issues affecting your trading performance. Choosing a knowledgeable and experienced trading mentor who can answer your related questions and guide you toward success is also crucial. Additionally, only risk what you’re willing to lose and avoid investing in multiple financial sectors simultaneously. Focus on learning and mastering one industry before moving on to the next.
The concept of breakeven in trading
Breaking even in trade means closing your position at 0 i.e. neither profit nor loss. If you have made it past losing, then congratulations. You belong to a rare category of traders who have mastered risk management and an average trading mindset. Future. By journaling their trades, breakeven traders eliminate all their mistakes step by step. Their future horizon becomes broad. Amateur trading. Breakeven traders lose their profits by making errors here and there. There are called amateur market participants.
How can you transit from losing to breakeven?
As mentioned above, journaling aggressively can help traders track their progress and identify areas for improvement. Conducting pre and post-market research daily can help traders stay informed and make better decisions. Using expert advisors to manage positions can be beneficial, especially for novice traders. Re-reading books on trading psychology can also help traders address any psychological issues affecting their performance. Sharing trades on forums and receiving feedback from other experienced traders can also provide valuable insights.
The Concept of Winning in Trading
The winning traders have a solid mindset and are disciplined in their trading routines. They make up 10% of the total trading community. Here are some critical characteristics of winners: Psychology. While trading, professionals do not have fear, greed, happiness, sadness, euphoria, etc.. Winning traders are passionate. They have an inbuilt love for trading which drives them to achieve more. They are willing to give their all. Pro traders work non-stop to get the best out of markets. Professional traders understand that losses are an inevitable part of trading. They treat them as such, take a lesson, and move on. How can you transit from breakeven to winning? This can be the hardest in all of your trading journey. Becoming a market pro can take years of struggle, dedication, and financial knowledge. Constant error analysis, rectification, and guidance from the best industry can help you shift your career from breaking even to winning.
Summing up
Proficient traders go through three stages in their trading journey: losing, breakeven, and winning, similar to the traditional education system. The losing stage is when traders experience small or large drawdowns and struggle to control their emotions. To move from losing to breakeven, traders should only risk a small percentage of their portfolio, stick to one trading plan for at least two months, and seek guidance from a mentor. The breakeven stage is when traders break even by closing their positions neither in profit nor loss. To move from breakeven to winning, traders must have a solid mindset, passion, and discipline and understand that losses are inevitable. Becoming a market pro can take years of struggle, dedication, and financial knowledge.