How to Recover from Forex Losses? Published on May 21, 2019
·
The
Story
There
was once a road called the Forex Road. The Forex Road was a two-way road. One
went up the hill and the other went down. The way up was bright and shiny. The
way down was dark and grim.
A man named Trader decided to take the Road
upwards with the goal to enjoy the brightness at the top of the hill. The man
started the journey with confidence and ease, for the more he went up the brighter
it got, but soon enough he realized that getting to that top of brightness had
a price.
The
price varied and took many forms. At times, Mr. Trader would stumble or fall
for a while before getting back on his feet. There were also those who tried to
deter him from reaching his goal. It sometimes got to a point where Mr. Trader
would be pushed down the hill.
Days,
months and even years went by. Mr. Trader stumbled, fell, and got pushed
away. Despite all of that, he never forgot his goal: to reach the top of the
hill, where it was bright and shiny. So he learned to face challenges and kept
on moving forward.
Today,
Mr. Trader still hasn’t reached the top, but the reward of experiencing
brighter days as he moves forward has always given him more confidence in
reaching the end he has in mind.
What
made Mr. Trader different is his power of will; his will to reach the top of what
was in reality a never-ending road.
_____________
The
short story above summarizes, in a sense, the world of forex trading. The
two-way road could be thought of as the forex market. The way up the hill is
the great potential this huge market has. The more you go uphill, the more
profits you get.
Needless
to say, doing downhill means one thing: losses.
It’s
losses that bother traders. The reaction to them could be met with anger,
anxiety, fear, or leaving the market once and for all.
We
all suffer from loss one way or another, but what’s important is getting over
them and moving on.
·
The
Lesson
Here
are a few short lessons we’d like to share on how to recover from losses when
trading forex:
1) Know what went wrong
Treatment
comes after knowing the cause. So try to figure out what went wrong. Check your
trade journal or history log to carefully examine your losing trades.
It
could be that you did the mistake of over trading. Sometimes there could be
something wrong with your trading strategy.
2) Take responsibility
This is where you should evaluate your
situation and admit your mistakes. Try to do some damage control, learn from the
consequences of your trading behavior, and try finding what you could have done
differently.
3) Never lose more than you earn
Say that you make, on average, $1000 in
profits. The point is that you should never risk losing more than what you earn
on average, especially after suffering a loss. Some traders go for an
all-or-nothing approach to compensate for the loss, but this often ends in utter
failure.
Get advice from fellow experienced traders. If
there aren’t any, you can always reach trusted, regulated brokers to gain some
insight and guidance.
5) Demo? It depends.
If you suffered big losses, the best thing to
do is to go back to using a forex demo account until you get back in shape.
Once your back to your live account, trade small, that’ll help you build your
confidence.
What
matters the most after suffering a loss is working on getting back in shape.
It’s totally fine to take a break from everything for a while if it’ll help you
become better, because trading requires one to be ready and confident, which
may not be the case for you after losing money.
Take
a break, sharpen your skills and come back to online trading with strategy and discipline.
