Learning how to lose money

Learning how to lose money
I decided to open this thread / journal to learn how to lose money.
I know - you think I should actually learn how to make money, because surely that's what it's all about - hmm .. actually it's not quite true (or at least not in my case).
Like most of us that invest in FX i have my favourite system, thanks to which i can do 30% -50% per month sometimes more, have established rules for the SL and TP etc. everything works well .... hmmm ... but ... in this whole strategy is one weak element >> ME <<
i always know where is my SL,TP, when to move to BE before opening position, but once in a while when i am in a losing trade, price is closing to my SL I think that I know better, I ignore my strategy and I delete / move SL, and then i always lose big one, monthly profits and even I blow my account.
Once i touch SL i am losing control of my trade. Have no idea when and how to close this losing position and losing badly.
So this is why i want to learn how to lose money and know how to explain myself that closing it was the best think i could do and thanks to that equity in my account is increasing steady .


I found a few reasons which stop me to execute what my strategy indicate in such days, but still need to learn more.
i hope This Journal will help me to learn how to shut the lossy transactions so final effect will be maintaining constant increase in my account.
I will try post here my mental approach to every loosing trade i am closing so if i need i can always comeback to it and build my confidence.
I would be grateful for all yours comments, ideas ,tricks how you deal in such situations.

FlyRAmboo

What leverage are you using?

i am using 100:1, my initial R:R is 2:1, i am risking no more then 3-4% at once. ( at least that is my initial rules )

One of my discoveries is( which probably for many of you is known for a years )very basic rule, but took me quiet some time to understand what else it means : if you risk a large percentage of the deposit at a time, and your SL is about to be hit, mentally is much more hard to accept upcoming big losers and it is often what makes you to move SL or completely removes it and "pray" that the market will turn around in your favour .
If, however, you risk less, a lot easier for your brain is to accepts these losers and it is easier to close it.

Just a small part of my post from before on some other thread: I've just made the main sentence in bold.

"One more thing, regarding stoplosses - when you start moving it around - ask yourself why are you doing it. That being said I'll point to "b)" again - not only stop loss defines profit target, but it defines the trade in general - consistent profits, in vast majority of cases, need to come from consistent system/strategy - and there is no such a thing as consistent system without a stop loss."

To add some more: Movable stop loss in the counter-direction is just fear taking over you - try to eliminate your fear by having strict stop losses. The way I did it is funny - At some point I noticed sometimes I WANTED FOR THE PRICE TO REACH MY STOP LOSS so I'm done with that bad trade. Try to truly understand the psychological mechanism behind this last sentence.

p.s. also there is a reason why jmn5611 asked about your leverage. Higher the leverage, higher the probability of you succumbing to fear. I know traders who have had years of consistent profitability and made a lot of money - when they started increasing the leverage, they lost it all...
Define your strategy, and imagine yourself as a "king in your department" - department being a strict stop loss, strict profit target (negotiable), and probably most important - trailing your potential winners.

1) Stop loss - eliminates fear
2) Trailing - eliminates greed

The point is not to care about money - which is controversial to the whole trading stigma imposed by so many "experts". End goal - yes, it's consistent profitability blah blah. MAIN GOAL - yes, its correct decisions based on blindly following trading strategy. And of course, do try not to mix 'strategy' with system.

Cheers.

Also, there are brain chemistry studies which show the equal amounts of endorphine and other hormones excreted while we are losing and winning. I'll repeat - our brain, on chemical level, perceives winning same as losing. Mentally, it translates into this: You are in the SAME mental state when you see 1000 bucks in the red as well as seeing 1000 bucks in the green. The only thing that's different is the emotional state - which you should completely eliminate as you are on the learning curve of trading the financial markets.

thanks DemoAntares for your replay ,
but the think is i know in those moments how to explain to myself why i need to move this SL ;-) even when in my strategy SL once set should not be moved
as per attached picture, i should close this short trade when price hit SL, but it was down trend and i convinced myself to remove SL, coz market will go south in no time. but my system was telling me," market now is going opposite, so close trade". i didn't . and second pic, show how market went. but i was unable to close then trade, still was explaining to myself that this is only retrace.

and i could not close the trade, cos when i realize i was wrong, trade was -400 pips, so closing was much harder , and with every minute harder.
so this way we coming to my first discovery, i need to close when losing trade is not so big, i need to trust blindly in my system.

Dont trust your system blindly - don't even trust at all - there's no trust in markets, trust is an emotion - INSTEAD, trust your strategy. Mandatory stop losses, unmovable like a mountain, precise if possible, and ofcourse give it some space to breathe too, no point in putting too tight stop losses, especially on higher time frames. But it's all based on which system you use. I see you're doing 2H charts, I have a suggestion on that place you've opened short on - although pic is not clear enough, Your short seems valid since its on a potential resistance and you took a risk there, which was actually a good trade in my opinion (although I dont trade like that). Your problem is profit targets. In this case you should have noticed those 2 monster candles, just a bit to the left, first one a long red, and second one a long green which negated that whole red candle. That green candle is your "mother candle" and by calculating it's length, you will assess profit target from your short which was taken above. For me that profit target is at 50% retrace of that green candle. You for some reason wanted more.

I think your system is ok, but you need to "fine tune" it by adjusting your trading strategy. Don't let your stop losses to be moved around. And try to implement basic candle patterns in your system too - it will increase the number of successful trades along with your price action/supply/demand lines.

For me those two monster candles are a strong indication of a reversed downtrend, and after I see a long red candle followed by a bit shorter but still long green candle, I find it a strong reversal. Of course, that pattern needs to happen in a downtrend. I don't trade breakouts from flat/slightly tilted ranges. Once again - your short is valid (premature from my perspective, but that's just my opinion since I'm conservative trader) BUT you were too bearish on that pair at the moment and should have noticed those 2 candles would obstruct your bearish view.

Sorry if I made stuff unclear, not a native speaker

Cheers, and may the stop losses always be with you - UNMOVABLE