psychology

When to quit trading?

There will be moments in a trader’s journey where they question their profession and contemplate quitting trading.

 

We have all been there and we have had our reasons for it. But are these the right reasons?

 

In this blog post, I will discuss when one should quit trading and take a step away from it.

 

I will also give you our opinion on quitting and how to deal with such situations, so do read this blog post till the end.

Contents

So you want to quit trading?

Ask yourself these questions before quitting

When should you quit?

Quitting or taking a break?

Still want to quit?

 

 

Key Takeaways

i. Not worth quitting if things don’t go according to you a couple of times.
ii. Follow your trade plan, trust the process, and results will follow.
iii. Take a break instead of quitting.

 

 

So you want to quit trading?

 

thinking about quitting forex trade

 

It is very easy to go into trading. One just needs a phone or a laptop, a decent internet connection, and a strategy to trade. This low barrier to entry results in a lot of competition and a lot of failures.

 

It is a widely known statistic that 90% of traders fail to become consistent and profitable. If you are thinking of quitting trading then don’t feel bad because you are not alone.

 

At times this business becomes so taxing, both psychologically and financially, that the thought of quitting keeps lurking in the minds of traders.

 

I completely understand the position traders find themselves in while they get such thoughts and it has happened to us all.

 

But before you make your decision and step away from this business and professional trader, I would seriously suggest that you read through everything that I will discuss further in this blog post.

 

 

Ask yourself these questions before quitting

 

ask a question to yourself before quitting the forex trade

 

Before you decide to call it quits, take a moment and ask yourself these questions. These are questions that will help evaluate whether the problem is because of shortcomings from your end or is it something else.

 

1. Are you trading with a well-defined edge? 

By well-defined, I mean well-tested and well-planned.

 

If you pick any random indicator or strategy and start trading based on the signals it gives, then you are doing it completely wrong.

 

Such practice will only lead to the accumulation of losses and will eventually lead to burnout.

 

 

2. Are you managing risk properly at all times? 

Risk management is the only holy grail in this business.

 

Failure to manage risk properly will solidify a trader’s downfall as losses will be bigger and unmanageable. These losses will accumulate and will eat up the trading capital.

 

 

3. Do you follow your plan at all times? 

If you are able to follow your trade plan at all times and avoid deviating from it, then you are on the right track.

 

If you are following the plan every time then it means that you are disciplined in your approach to trading and you are not taking things casually.

 

 

4. Are you allowing your emotions to take the better of you? 

The best traders always manage to control their emotions and stay analytical in their approach to trading.

 

If you are the kind of trader that succumbs to their emotions and let them come in the way, then you should work on improving on this aspect.

 

 

When should you quit?

Did you ask yourself the questions we discussed above? What answers did you end up with?

 

If you trade with a defined edge, manage risk properly, never deviate from your trade plan, and do not let emotions take over then you are doing the right thing.

 

But still, if you find yourself asking the question about quitting then the problem lies somewhere else.

 

1. Depletion of mental capital

We all know about the perils of capital depletion, but not everyone acknowledges the depletion of mental capital. Even if you are doing everything right, results may not always be in your favor.

 

There will be times when things will not happen as planned and you cannot do anything to change it. In times like these, frustration sets in and it keep growing in the head.

 

This leads to the trader losing his mental capital and thinking about quitting.

 

 

2. Being too emotionally attached to money

Most people have some kind of emotional connection with moneyThey give a lot of importance to money in their life and to be completely honest, it is not wrong, every person has their reasons.

 

This attachment to money makes it difficult for them to digest a loss. They just cannot take a loss. In this business of trading, losses are inevitable. You will incur a loss from time to time.

 

This reluctance to take losses coupled with a rough period in trading where losses are coming back to back will discourage a trader.

 

Traders either build the patience to survive the period of losses or they might just end up quitting.

 

When you should quit

 

 

3. Poor ROI

At the end of the day, trading is a business, and traders get involved in it to make some returns. Traders give their time and they expect to earn something for the time they are putting in.

 

You can give your time to another business or may even work a job and you will get rewarded for your time you put in. It makes no sense to put in the time and get fewer returns which can be higher if you did something else.

 

For instance, you work a job where you put in 60 hours a week and you earn on an average of $50 per hour.

 

You also trade in the forex market and only take swing trades and it requires you to put in only 5 hours a week and the profits that you earn amounts to $25 earned per hour.

 

If everything stays the same, will you quit your job to trade full time even though you earn more for the time you put in?

 

Yes, you can earn more through trading if you increased your capital and put in more time to trade different strategies but that is still not certain.

 

I am not intending to discourage you from trading, I am just giving you a different perspective to look at things.

 

For some individuals, they have to give all their time to their jobs and in return, they are even rewarded well for it.

 

Now would it make sense for them to give less time to their well rewarding job and focus on trading? No, as it will affect their job.

 

Once you think through this perspective, trading will look a bit less attractive and you might decide to quit.

 

 

4. Insufficient trading capital

Sometimes having less capital can be a problem. It does not mean that traders cannot start trading with a small capital though.

 

Small capital will have small profits and this may not be worth much to a trader. Less capital could be because the trader cannot afford to dedicate much capital for trading.

 

Traders would want decent returns from trading in order to make worthwhile their time. In order to do so, traders would sometimes blow off their risk limits and take risky trades only to go broke.

 

Some traders may borrow money for trading. I would seriously suggest that you do not do this and if you are, then stop right away.

 

Never trade with a capital that is not yours. The added mental pressure of a borrowed capital will mess up with your emotions and psychology.

 

In such situations of insufficient capital, traders might choose to quit trading and do something else.

 

 

Quitting or taking a break?

 

thinking of quitting or taking a break in forex trading

 

Now that I have asked so many questions, let’s ask one last question, do you want to quit or you need to take a break? I personally do not like the idea of quitting.

 

You might not feel the same about it and it’s completely understandable.

 

But what I would suggest that you do is to take a break, step away from your trading desk for some time and re-evaluate things.

 

By taking a break you will be able to recharge your mental capital and quitting really isn’t the answer for it.

 

If you take a break and don’t quit, you will be able to assess your performance, identify the shortcomings, make the necessary changes, and come back.

 

Issues like being too attached to money, not able to take a loss, indiscipline, etc. can all be worked out.

 

Yes, if you are unable to get a good worth for your time and have a small trading capital then you can always quit, build it up, and get back.

 

There will always be ifs and buts and I understand that at the end of the day it is entirely your decision to make. So whatever decision you make, it should be only after taking everything into consideration.

 

Trading is a skill that many people aren’t fortunate enough to learn forget even master. Once you have some skin in the game, you should look to keep building on it. This is a very lucrative business if done right.

 

You can always take a step back, wait for things to align and come together, and then bounce back. Quitting should not be the answer. Even if it is very much necessary then you should at least try and paper trade.

 

This way you can still have some experience and you can rectify all the problems that led you to quit.

 

 

Still want to quit?

 

final decision  to quit forex trading

 

If you are still reading this blog post then it means that something inside you is telling you not to quit.

 

Maybe you are just looking for something to bring back the enthusiasm and we would be glad if this blog post did the work.

 

Let me know what decision you took and whether this blog post was of any help or not.

 

Share this with traders that are thinking about quitting and let them also get the chance to revaluate their decision.

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