There was a time when I could win, so I couldn't stop doing FX
When I was trading FX for about five years, I didn't always lose.
Rather,because there were times I could win, I ended up continuing for so longI think so.
Enter at the place you devised yourself.
The market moves in the direction you expect.
There are more profit realizations than stop losses.
Account balance also increases.
Then,
“I’m finally starting to understand.”
I think.
When you win, you tend to think you have grown
Fewer pointless trades than before.
Even when you lose, you can explain the reasons.
I feel my chart-reading eye has changed.
I used to think of it as
evidence that I’ve improved.
But that state didn’t last long.
A method that worked at one time stops working at another.
If you chase the trend, it will reverse.
If you aim for a reversal, it will keep moving.
Then,
and then,
“Is the stop loss too tight?”
“Is the take-profit too early?”
“Is the time frame bad?”
“Is my perception of the market environment wrong?”
You search for the causes.
And study again.
Change the rules.
Test them.
Then, another period of winning comes again.
When that happens,
“I’ve corrected my previous mistakes.”
I think.
Whether you win or lose, there is a reason to keep going
Looking back now, this cycle was troublesome.
If you win,
“This method is correct.”
You think.
If you lose,
“There is still room for improvement.”
You think.
In other words,
whether you win or lose, you could create a reason to continue FX.
This makes it hard to quit.
If you keep losing,
you might think, “I’m not suited for this.”
But sometimes you win.
That win becomes a hope that
“If I keep going a little longer, I might stabilize.”
Temporary profit and reproducible ability were two different things
During trading,
whether temporary profit came from your skill,
or whether your method just happened to fit the market at that time,
was not easy to determine.
Nevertheless, the profits remained as numbers in the account.
So,
“This method works.”
was enough to believe.
It happened once.
Therefore, you can do it again.
With a little adjustment, you can revert it.
With a bit more experience, it will stabilize.
That’s what I believed.
I didn’t trade for five years just because I lost
I think this is quite important in hindsight.
I was
not trading for five years because I couldn’t win.
I kept going for five years because I could occasionally win.
Losses make you doubt yourself.
But wins
make you believe in your thinking.
So, you can’t simply be wary only of the moment you lose.
Rather, even after you win, there are dangers.
After winning, risks seem small
In a study of 95,617 individual FX traders discussed in this book, when the previous trading day was profitable, the next day's trading volume was about 19% higher than when it was a loss.
Of course,
this does not mean that “all who win become overconfident and increase the lot size.”
But I had a sense of it myself.
Profit appears.
Confidence grows.
Trade larger.
Market conditions change.
Losses grow larger.
Nevertheless,
there is memory of “I could win before.”
So you think,
“I can bring it back again.”
I think.
Winning is not proof that you will win again next time
You may win for several months.
Profit continues.
That is a fact.
But,
one win and reproducible ability are not the same.
A few months of good results does not equal long-term advantage.
I did not sufficiently separate these two at the time.
If I could ask my past self one question,
not “Did you win?”
but,
“What is the basis for thinking this win will continue?”
I would want to ask.
Continuing FX is not only caused by losses
In FX,
there is talk that “you quit because you want to recover losses.”
That is true to some extent.
But for me,
what kept me in the market wasn’t only losses.
The hope that I might be able to do it as well.
That hope isn’t born only from losing.
It grows stronger precisely because you have winning experiences in the past.
So,
not only “am I losing now”
but also,
“am I continuing because I have reasons from past wins?”
it might be good to reflect again.