Article / 24 August 2016 at 23:28 GMT

Traders need to learn how to lose

Managing Director / Technical Research Limited
New Zealand
  • Trading is a discipline that takes time to gain competence 
  • While you need talent, you also need mental strength to suceed
  • To be a winner you first need to learn how to lose
  • This means understanding how you make mistakes, and learning from them

By Max McKegg

Forex trading is a fascinating and potentially rewarding undertaking. Over the past three decades I have earned my living as a forex professional; providing trading forecasts to institutional as well as individual subscribers around the world, as well as trading on my own account. 

It has been a highly rewarding experience (both financially but also in terms of quality of life, enabling me to work where, when and how I like) in which I have been able to provide a more than satisfactory living for my family over the years. Furthermore, I have found it to be a thoroughly enjoyable way in which to earn a living and I still do (which is why I have no plans for retirement). 

 Tennis player Roger Federer was a temperamental youngster, something he had to learn to control before becoming the champion he is today. Photo: iStock 
Trading is a discipline that requires time to gain competence and, as with other pursuits, to learn to be a “winner” you must first learn how to lose. Using a tennis analogy, sure, to be a world-class player you need to have the talent but to consistently succeed at the highest level you need mental strength. 

This means understanding that you will make mistakes, that you will have good days and bad ones, that you will not always feel like “taking the court”, that you will come up against difficult opponents and that you will not always execute points as well as you do in practice. You will also receive many “bad umpire calls” and then there is the crowd to contend with. How you react to all these challenges will ultimately determine your success.
The great tennis champion Roger Federer didn’t always exhibit the poise and decorum, mental fortitude and placid acceptance of umpires’ decisions that has characterised his playing career for over a decade now. In his youth, while learning his tennis craft, Federer had a fiery temperament and despite obvious boundless talent, he had to conquer his inner demons and perfect his temperament on court before he was able to rise beyond the level of a very, very good tennis player, to that of a champion. 
It’s the same in forex. FX trading is a tough business, where many try but few succeed over the long haul. If you can't tolerate (or become upset) with losses, then trading is simply not for you. Inevitably, losing is a part (a big part) of the forex trading experience. Also inevitably, even the very best of traders will suffer trading draw-downs (frequently) and this too is all part of the trading experience. It’s vital to accept losses in your stride but it is also critical that stringent risk/money management is employed at all times to ensure that these losses are minimised. 
While I am content to give my personal trades every reasonable chance of working out, I will not let profits “come too far back on me” and I will never let losses persist. In this way, my trading losses (and there are plenty of them) are kept relatively low, relative to my winning trades which really work out. This provides the essential trading edge required to enable long-term success.

– Edited by Gayle Bryant

Max McKegg is managing director of Technical Research Limited. If you would like an email notice each time Max posts a trade or article then click here or post your comment below to engage with Saxo Bank's social trading platform. 
Ali Baba Ali Baba
really insightful, thanks for this Max
Moot Moot
In the penultimate paragraph you refer to toleration with losses. Sorry, that's unclear to me as it is worded. Said differently, we must learn to tolerate losses because they are an unavoidable part of trading. So, if you cannot tolerate losses, you shouldn't trade. Did I understand your point?

Excellent article! As always. Thanks.
Max McKegg Max McKegg
thanks ... Typo .. ... should be can't tolerate ...
Patto Patto
You really love that Roger Federer Max !!
Max McKegg Max McKegg
"Fed's" a champion on and off the court!
Cat Cat
Great analogy! I do believe you can learn more from your losers than your winners.
Max McKegg Max McKegg
well said !
Relevant articles for you


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail