Why Do We Lose a Trade After Winning One?

Sometimes when you make a good trade, it would change the perspective of yourself. You might start thinking that your trading performance is changing. “My level of trading is increasing” this thought can roam around in your head. And with excitement, you might keep on trading with opening another one after the one you have won. This time you might be looking for another good hit as you have followed the same strategy as the last (winning) one. Surprisingly, this trade could come out being a loss project. You can even lose the whole profit won from the last trade of yours. This happens to traders most of the time. Today we are going to show you some reason behind this kind of phenomenon of the traders.

Feeling too excited for winning

Like we said in the intro, you must get excited when you win a trade. Why wouldn’t you, it is a human nature to get happy with wins. When you do so, there is a chemical in your brain that will be injected. That is called ‘dopamine’ and it helps to cool down the adrenalin created by happiness in your brain. Another thing it does is, slows down your brain’s functioning power. In that situation when you are happy, the brain does not work properly. Most importantly, thinking power stays irrelevant at that time. And when you open a trade being happy or excited, there must be poor planning for it and you must position it at a bad time. As a result, your trade will become a loss.

Ignoring your weakness

Do you really know your weakness as Forex trader? Majority of the UK traders start trading without having enough knowledge about this market. They simply use the market leverage to earn huge money within a short period of time. But this not the proper way to master the art of currency trading. You have to start with the demo trading account as it will offer you the perfect environment to develop your skills. Some of you might get bored with demo trading environment but this is just a part of your training. You must have a high level of patience or else it will be very hard to overcome your emotions after losing real money in the Forex market. It’s highly recommended, you demo trade for at least six months as it will help you to identify your key weakness. Once you know your weakness, you can easily develop yourself as a currency trader.

Getting frustrated with a loss

Besides being happy or excited about winning, there is another thing that bothers the traders. That is called losing and you might have heard about this word. If you are a novice in this business, that word would be your closest friend. And when you lose, multiple things appear in your head. They have really strong names like frustration, regrets, anger etc. and they have stronger forces on your brain too. They bother your head from being efficient. And most traders fall for the trap too. They think about what they have lost in the last time they have traded and forget about getting good for the next one. And when you trade without planning about new trades, the next one will be a disaster too.

Frequent trading problem

Frequent trading mostly comes from the emotional dilemmas we talked about in the last segment. When you are thinking about the loss you have made from a trade, your brain will only think how to recover from this loss. It will not try to make an effective plan for your trades. And when you are trading too frequently, there will be no proper time for thinking about your trades either. As a result, the trade you are going to execute will not be a proper one to win either. And you might lose it for the lack in planning too.