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How to Manage Losing Trades in the Right Way

by Didimax Team

When you learn Forex trading, there is no doubt that you are warned that you may get loss in trading Forex. If there is one feeling which every trader wants to avoid, it would probably the emotion resulted from watching a losing trade. Well, none wants to see that they are losing. Then, what should we do at this point? 

How You Should Manage a Losing Trade in the Right Way

When you are facing losing trades, you may feel like you are watching yourself getting less wealthy at the specific point of time. It will be a contrary of why you trade in the first place. As a result, you may make a wrong move or give up. To help you, this article will discuss how to manage losing trades.

#1 Prevention is the Best Medicine

You might not be able to prevent losses in total. What it means here is that you should try your best to prevent any uncontrollable trading situations. To prevent big losses which can happen anytime during the night and day, you should have a good risk management that avoid you from losing an amount that you’re not willing to lose.
Avoid being overconfident
Many people think that losing money is part of being new in the Forex market. However, it is actually more about someone who is overconfident in trading the market. When no one knows exactly about the future, being too confident in taking a trade thinking that you can successfully handle trades on the fly is not a good practice.
Create a good trading plan
Instead of being too confident without any good plan behind, you should take your time designing a trading plan and stick on it. Creating a trading plan can help you to avoid that “overconfident” moment when there is a rare opportunity in the market. In your trading plan, include risk management, rules of trading and others.

#2 Acceptance

You have tried your best to prevent any losing trade. However, you cannot deny that in another time you find yourself lose in trading. When it happened, accepting the truth that you have already lost some of your money will be better than getting swayed by its hard feeling. Keep in mind that losing is common in trading.
You should first accept that you have lost in a position. But, instead of thinking it as all about losing trade, you should set your mind to see that it is just a feedback. As a result, you can use it as a data for your next move in opening and closing a position in the Forex market.


#3 Set the Line in the Sand

When watching the equity of your account, consider the floating losses and gains you have. You can then determine how much more you would like to commit to a trading idea. You should always think of an amount of money you can afford to lose when trading. This is because you may loss anytime without any warning.
For instance, you can keep your total risk to be less than 5% of your account’s equity. As a result, if you have equity of $10,000 in your account, you would like to keep your losses under $500. You can take this notion a step further by diversifying within this amount of risk for the better.


A Final Word of Managing a Losing Trade

In conclusion, you should always remember that losing a trade is a common thing in trading. You can always face a gain and loss anytime you put a position in the market. For this reason, you should continuously learn Forex so that you can master the right way to minimize your loss in trading Forex.



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