In today’s article, we will discuss a trading mistake that always discourages us. It is “repaying” the Forex market the profit earned for unjustified and silly reasons.
First of all, you also need to understand that we all have good and bad reasons for losing profits earned in forex trading. However, not every loss is bad.
The legitimate reasons here are simple. Not all traders will be the winners even if you have the best strategy and an absolute discipline in applying it to trading. The losing and winning orders are always mixed in every trading method. And the ratio is random.
There is no reason that you should get angry or mad when paying back the profit earned to the market. Please understand that it is a very natural and inevitable problem. It is an integral part of the job which is the “cost”, the “price” of a transaction.
What about the bad reasons? How many times have you slapped your face because “I know I should not have placed that order” but you still pressed the buy/sell button? (I have, many times). What I’m saying is simply that you return the money because you don’t know what the hell you’re doing. Or you are caught up in the trading spiral (like gambling addicts), or sometimes both.
Now we will look deeper and discuss if there are any ways to get out of this.
Cards and chips
One obvious fact is that people who spend with cash will spend less than those who pay with a card. Why is this? Instead of physical stuff like banknotes, cards with an electronic payment process make us feel less pity for using money. Because the money here is real but also not real. The card is not real money, it cuts away (more or less) your feelings for the money you spend. When you aren’t “bound” to your money, you tend to spend more.
Think of poker chips. It may be $1,000, $5,000, or more but it is just a plastic circle. Have you ever thought that if we traded with real cash (not virtual money in a software), you would be more careful and put a lower risk in each transaction? Everything the broker does has its reasons. There are many reasons for governments to encourage people to use cards. One of them is stimulating consumption and tighter control of each individual.
What does this have to do with the Forex profit?
Regarding an online trading account, your account balance is electronic numbers. They are not “real”, just like a credit card. We, humans, are always more responsible and more careful with what we can touch or grasp and are easy to “neglect” symbolic things.
Regarding the return of Forex profit to the market, it begins with the feeling of “not being bound” with the money in your trading account such as being unable to touch, smell, or store. When you have a winning order, the market gives you money. However, it is still just the number on the screen.
You only have real money when you withdraw money from your bank account, take it with your hands and count. Therefore, you do not have a lot of “real” feelings about this profit. This is a very rare thing in trading when having no emotions becomes a bad and disadvantageous point.
I recommend that you periodically withdraw your earnings and feel them with your hands. So why do most traders not do this? Instead, they keep the money in the account. Regarding this, we will go further in the next section below.
The reasons we lose the profit back to the Forex market
Trading addiction is basically the same as gambling addiction. People often do not know or realize that they are addicted. They deny it when someone tells them that “you’re addicted”, that “you’re having a problem in the transaction”, or that “you’re gambling”. No drunk man accepts that he is drunk.
A trader, who is a trading addict, is also a risk addict. Earning money in dangerous positions with high risks brings good feelings and excitement to them. Just like with alcohol or tobacco, you will get more and more addicted.
You set the risk higher and higher with more frequency (more and more transactions during the day). And the risk amount for each order is too large compared to your account balance. For example, in your balance, you only have $1,000 but you always place orders of 1 lot, 2 lots, etc.
Trading passion or addiction
Like other professions, people say: you need to be engrossed in your work, stick to it, think about it wherever you are, even when you are eating or sleeping. For trading, this is not necessarily good. You seriously consider this to be a real business. You must think that you should be passionate about it, stick to it, always watch every breath of the market, etc. But in my opinion, what you need to do is not to fall in love with it and not to become an addict.
If you leave yourself to get into this situation, sooner or later (probably very soon) you will burn out one or more trading accounts. How dangerous this is. And as shared above, you can not touch or grasp your trading money. Instead, they are just electronic numbers. The transaction is also very fast and simple with just one mouse click. All of this is very easy to make you a trading addict.
The feeling of risk is often what makes us addicted, not the feeling of making money and profit. That is why we return the profit to the Forex market. The feeling of making a profit is overshadowed by the feeling of adventuring.
That makes you jump into the market and risk your profits. It’s easy to put yourself at risk to satisfy your trading addiction. Everyone knows and recognizes the harmful effects of alcohol or tobacco on their own bodies. But why do addicts still use them more and more?
It is a vicious circle and most likely it has been and will ruin you. Ask yourself if you are a trading addict. Stay away, stay alert, and make an effort to counteract it.
I personally was also a crazy trading addict. I have burned out many accounts and have also made all mistakes in trading. That is also one of the reasons I write for this forex trading blog. This is like a record and self-criticism which helps us learn from the mistakes and from our own experience.
You will definitely lose money to learn what you need. I just hope and wish you not to be discouraged with the way you are on. Don’t get depressed when you have not earned money with forex trading.
I will write, write a lot to help you, and myself. See you in the following posts.