Updated from its original posting on 2012-02-17
Slumps are inevitable in forex trading. They come with the market’s ever-changing environment, and even successful traders go through them.
In such stressful times, it’s very easy to beat yourself up, focus on what you’re doing wrong, and overlook the things you’ve been doing right. It’s part of human nature!
It can be argued that being hard on yourself is a way of addressing your problems. But it can become more of a bane than a boon to your trading if you get caught up in all the pessimism.
When the mind is zoned in on all the negative aspects of your trading, there’s a tendency to lose sight of the positive aspects that brought you success in the past.
It is for this reason that I believe it’s better to focus your attention on banking on your strengths in times when you’re in a forex trading slump. Go back to the basics, as they say! On the flipside, when you’re trading well, your attention should be shifted to the forex improvements that you can still make.
Doing so will help keep your trading confidence at proper levels. Remember, having low confidence can be just as bad for you as being overconfident!
Here are some steps you can take to stay positive during a forex trading slump:
Step 1: Don’t simply dwell on the problem. Act on it.
As I mentioned in one of my articles about correcting bad trading habits, you should try to be more conscious of your trade decisions. You can do this by talking out loud while trading or by journaling your trade decisions. Taking note of your thoughts and feelings during a trade can help you identify what you’re doing wrong so that you can work on cutting those bad habits later on.
Step 2: Review those trades that worked well for you
Having a detailed forex trading journal should come in handy at this point so I sure hope you have one! By keeping track of the proper trade decisions you’ve made and the profitable setups you’ve taken, you’ll be able to identify which ones are effective for you. Also, reminding yourself that you were able to catch some good moves in the past would serve as a nice boost for your ego.
Step 3: Find your trading niche.
Niche trading is all about specializing and focusing on what works well for you. You see, some traders aren’t able to perform well because there’s a mismatch between their personalities and their trading styles. To avoid this, ask yourself the following questions: What am I good at? What are my strengths and weaknesses as a trader? What are the qualities that can make me successful?
In addition, you might also want to take our Personality Quizzes in the School of Pipsology to help you find the answers to questions such as the following: Which currency pair should I trade? Which trading style is best for me? What kind of mechanical system suits my personality?
Bear in mind that one of the biggest challenges in trading is to stay focused and positive, even when your account balance is turning negative. By making sure that your confidence remains intact, you’ll have a better chance of making it out of a slump. Always remember to focus on the process and not solely on the profits.