Are you familiar with this situation? You put your heart and soul into trading, but your losses keep growing. You have been trading for several years without any results. You realized that the money you lost could be much better used in other endeavors. Q: Should you quit trading?
If you are in financial difficulty, you should stop trading immediately
Many traders get involved in trading because they need an additional source of income. Without trading, they are quite capable of paying their bills and buying food.
If you are experiencing financial difficulties, it may seem that trading is your ticket to a better future. But in fact, this is far from the truth.
- Trading is not a get-rich-quick scheme.
- Trading is not a place where you can invest $100 and get $200 back the next day.
- Trading is not a place where you get paid consistently week after week or month after month.
Because there are no guarantees in trading and there is always a risk of losing. So, if you are in financial trouble, use your money in a much more efficient way, such as paying bills, providing for your family, buying quality groceries, etc.
You should not risk your hard-earned money because of the uncertainty in trading. This will be unfair to you and your loved ones.
Borrowing money to trade is financial suicide
Trading is an intellectual game. If you want to be successful in this business, your thinking must be at its peak. But if you borrow money for trading, you deprive yourself of any benefits.
Trading with borrowed money is trading with money that you cannot afford to lose. And when you trade money you can't afford to lose, you're making bad trading decisions because you'll have an "I can't afford to lose" mentality.
What are you going to do?
- You carry over your stop loss because you don't want to take a loss.
- You take tiny profits because you're afraid the price will reverse.
- You average your positions in the hope of recovering your losses in a market correction.
In the end, your bad decisions will make you lose everything, including the money you borrowed. Now you are in a worse position than before, because not only are you bankrupt, but you are also in debt. Do you want this to happen to you? Never borrow money to trade.
Don't Lose Your Mental Capital
Mental capital is the amount of energy to do something (be it trading, playing sports, studying, etc.).
Your mental capital can reach its peak when you first start trading. This is because you are experiencing hope, aspirations and you are inspired by new possibilities. But over the years, your mental capital is depleted.
You may have the following thoughts:
- “Everything is rigged here, and it is impossible to make money from trading.”
- “I have been doing this for years, but so far there are no results. I am a loser".
- “I leaked several trading accounts that cost me thousands of dollars. This money could be better used elsewhere. Maybe I should stop trading.
But if you haven't reached that stage yet, here's what you can do.
Manage your expectations
Trading is not a get-rich-quick scheme. It is impossible to learn all the nuances of trading in one weekend and expect that you will be able to earn consistently in a few months. So give yourself time to build a solid foundation.
It will most likely take you a few years to understand what you are doing and how to play this game. In addition, there is no guarantee that you will even earn something. So, manage your expectations!
Start Small
When you start trading, your results will be unimpressive because you have no idea what you are doing. To make up for your lack of experience, you must start small to reduce your "tuition fee" paid to the market.
This means that you can fund your account with as little money as possible, just to give it a try. And even if you lose your deposit, it's not over yet. This is just a small amount of money that you can afford to lose. And it will save your mental capital.
Focus on the process, not the result
You are probably wondering, “What is the difference between a process and a result?”
The result is what you want to achieve and is not under your control (for example, earning $1,000 per month through trading).
A process is the steps you will take to achieve your chosen goal and is something you can control.
For example:
- I will develop a trading strategy that has been thoroughly tested by me over the past 10 years.
- I will execute 100 trades according to my trading plan without deviation.
- I will risk no more than 1% of the deposit on each trade.
Does it make sense? So focus on the process and the results will follow.
If it hurts you to lose money
Not everyone has to be a trader. Yes, you understood me correctly. Not everyone is meant for trading. Trading always involves risk, and not everyone can take risk properly.
“How can I know that trading is for me?” For starters, you should be comfortable with taking risks. If a small loss bothers you, if you can't sleep at night, or if you keep thinking about losses all day long, then trading is probably not for you. And there is nothing to be ashamed of, because not everyone has to be a trader. Just like not everyone has to be an entrepreneur, civil servant, or athlete.
Now the good news. Just because you decide to leave trading doesn't mean it's for good. You can always come back when you're ready, the market will always be there.
Here are a few things to help you get back on track.
Deal with debt
You must start from scratch and not put yourself in psychological and financial dependence. Thus, pay off all debts first. Once you do this, you can start your journey of conquering the financial markets with a clean slate.
Get a job
You should never take trading as the only source of income. So find a job and have a stable source of income. When you can put food on the table without worries, you will be in a better mental state to trade because you will be trading with money you can afford to lose.
Trade on higher timeframes
Trading on higher timeframes will give you many advantages:
- This is less stressful as the market moves "slower" and you have more time to make decisions.
- You can work full time, which reduces your opportunity cost.
- You will spend less time in front of the charts, allowing you to do more than just trading in your spare time.
Take a break
When you feel like you can no longer trade or don't know what to do next, take a break from trading. Stop. When nothing threatens your deposit, you can reevaluate what went wrong and how you can improve the situation.
So give yourself time to "reboot" your mind, then get back into the fight to fight with renewed vigor.
Summing up
- Trading will not lift you out of poverty. If you are struggling financially, find a job.
- Trading is not the solution to your debt problems. If you have debts, pay off first before trading.
- If trading tires you, take a break. You can always come back later.
- Not everyone has to be a trader. If the pain of losing money is too much for you, then trading is probably not for you.