Currencies:
USD has pulled back over the last few days, with Friday seeing massive USD strength coming into the market. Our overall bias for the dollar is still bearish, but at this moment in time we have highlighted potential areas we could pull deeper into.
Because of this, we will be waiting for confirmation and trade the continuation of the dollar weakness. If we do happen to breakout to the upside and if we do not see a reaction from the area of interest, then more upside is likely with an upside target of 93.44 for the DXY.
Cryptocurrencies:
Our view on BITCOIN is the same as last weeks, we are waiting for further confirmations before taking positions on this. (Q2_Week_17)
Traders Tips – ‘Why Losing is a Necessity’
This week are introducing another section in some of the blog posts, called ‘Traders Tips’. This section will provide highly valuable information ranging from a deep dive into traders psychology to tips on analysing statistical data and more!
Today’s Topic: Why losing is a necessity and how to manage this.
Losing is a necessity in trading and is ultimately one of the obstacles a trader must overcome. Not just being able to overcome losses, but by being able to manage this. Firstly, we must think about why we experience losses…why can’t we win all the time?
The reason for this, as most of us should know, Is that trading is a game of probabilities. If we win 50% of the time, then that means we also lose 50% of the time. And dealing with these losses is key for longevity in the markets.
Now I believe most people can actually manage taking a loss here and there, but the struggle occurs when a lot of the losses happen one after the other after the other. When you may have a few weeks of breakeven or negative weeks. Aka a losing streak.
Managing these losses are critical to you as a trader. If you were to plot a losing streak on an emotional spectrum then a losing streak would be at the extreme of having a feeling of a lack of confidence, doubt, anxiety, lack of motivation, questioning yourself, insecure in your ability, aggression (revenge trading) and more. Winning streaks also create emotional responses which we will explore in a future blog post.
Ideally our psychology should stay in a sort of ‘equilibrium’ no matter your current trading results. This is essentially a mid-point on the emotional spectrum spoken about earlier – where you may sway side to side into different emotions but on average you are centred.
Now how do you overcome feelings of doubt and insecurity? 3 Step Plan:
- Identify – You cannot work on what you do not know, identifying issues allow you to create solutions to work on these
- Reduce risk and/or trading – In times where emotions are high, its important to scale back. Do this until you are back at the equilibrium point as discussed previously.
- Journaling – Identify what triggers your emotional responses. I.e. if losing 10 trades is enough for you to begin to ‘tilt’ with emotions then you know that after 10 losses you need to implement step 2.
Likewise it’s also key to maintain levels of confidence. This is something we will also explore in future blog posts as this is also an essential building block to trading.