Only a fool would believe that you can enter the competitive Forex arena without taking a few blows. An even bigger fool would also believe that all the blows he or she might endure are shallow. Accepting loss is one of the key elements any trader or investor has to master even before they go ahead with their first trade. It’s an inevitable part of the daily forex circle of life, some will rise and others will fall instantly and it can’t be any simpler than that.
Although you cannot avoid losses altogether there are ways which an aware trader can take advantage of in order to always be the one holding the reins regarding how hard he or she is to fall if they do.
Traders are probably tired of hearing this but actually it’s the most important and basic rule of any venture in the trading world, that is to never stray from your strategy. Forex trading is part lack and part intuition among others but one of the biggest mistakes both novice and experienced traders make is overestimating their own reach. There might be a day where the wins seem to be flowing in but this confidence should never hypnotise the trader and trick them into trading and investing more than they originally planned to.
This could also be a waste of time to traders that have reached an exceptionally golden capital and are not concerned about the amount of losses, but those whose trading started off with almost nothing and is only just found a stable rise should never use more than 10% of their capital for trading. Additionally, an aware trader’s characteristic is to always make an estimate of their chances of winning and their profits before deciding on any trading move.
Forex trading doesn’t guarantee a 100% profit all the time but it does provide the traders with loops to minimise their losses. Traders should not fear the stop loss option, even if the actual process does include a loss in way it at least keeps the damage control within the trader’s reach and does not extend to causing severe damage to his or her original capital. Stop losses can be controlled in various ways, such as equity stops that will limit the trader’s loss to no more than 3% of the total trading amount the trader has on their account.
The other way is actually hidden in the language of the charts, the charts become a very powerful and useful tool in a trader’s or investor’s capital because they are the only clear indicators of trend patterns and can also produce more successful predictive indications. When trading the user can get a clear hint of when to stop when the product he is following reaches a certain low, but it can also be used in the trader’s favour obviously if the line reaches a high.
A loss is part of Forex education, it’s inevitable and at the same time educational for even the oldest veterans on the field, however it should not be as daunting as it sounds. Losing should be taken with grace and analysis no matter how great, but because one loss should have the power of determining a trader or investor’s future, losses should be managed, controlled and processed in the same way routine manner as the market shifts.
