Accepting Forex Trading Losses and Moving On

During online Forex trading, you will be highly likely to experience occasional (or frequent) losses. The impact that those losses have on you on an emotional, physical and psychological level can make all the difference between an FX trading career and an FX trading holiday. By better accepting those losses you will be more likely to become a long-term, accomplished trader.

Listed below are three steps that every online trader should to better deal with forex trading losses:

  1. Reduce Forex Trading Losses

The first step in dealing with losses is to nip them in the bud before they spiral out of control. Though we cannot control the market and avoid losses, we can reduce them by developing a trading strategy and sticking to that strategy with the help of a well-devised trading plan. You should also perform in-depth technical analysis or follow the latest forex news to gain a deeper market insight. By following these steps you will ensure that any losses incurred are a result of a losing trade, rather than a bad trade.

  1. Respond to Losses

The next step is to respond to losses positively, calmly and in a focused, disciplined manner. To avoid feelings of anxiety or anger kicking in, focus on your breathing. As simple as this sounds it has the power to change your state of mind and quickly reverse the stress response. By remaining as calm as possible in the midst of a trading storm you will be better able to act with composure and discipline.

  1. Recover from Losses

To recover from a loss as quickly as possible you should check-in with yourself once the trade has been closed and a loss has been realized. How are you feeling emotionally on a scale of one to ten (positive or negative)? If you have accepted your loss then now is the time to evaluate whether your Forex trading loss was a result of a losing trade or a bad trade.

Alternatively, if you have reacted very emotionally to the loss then step away from the trading platform and regain your balance. What were you thinking at the time the loss occurred? What can you learn from the loss? How will you feel about the loss when you look back at the end of the day, week or month?

In Summary

The trick is to successful forex trading is to get back on track and rebalance your energies so that you are ready to trade again on an emotionally, physically and strategically balanced level. Follow our Forex blog and be updated with the industry news and trading tips.

Top Forex Trading Mistakes to Avoid

Forex trading is a high-impact activity involving a fast-paced market and plenty of volatility. However, forex trading mistakes are so common in this industry. If executed correctly it is incredibly rewarding, though unfortunately for many traders the challenges far outweigh the rewards.

Winning against forex trading mistakes take time, patience and determination. To be successful in currency trading it is important to avoid these classic mistakes outlined below:

  1. Trading with an underfunded forex trading account

This is a common mistake that many online traders make. By placing a number of trades that are too big for your account size, you risk being on the wrong side of too many trades, which could quickly lead to larger losses than your account balance.

  1. Poor approach to risk management

Sharp risk management is vital to your success. You need to input carefully researched stop-loss orders and well-defined targets that offer a good risk-reward ratio. Only risk a certain percentage of your funds held in your forex trading account. Use the trading tools offered by your forex broker to apply high-quality stops and targets.

  1. Attempting to squeeze every last pip from the trend

This is a greedy approach to forex trading that can quickly turn a profitable trade into a losing one. The forex market never sleeps and there are abundant opportunities to place profitable trades on the trading platform. There are plenty of pips on the market and plenty of other opportunities to succeed.

  1. Hesitant, indecisive trading

Indecisive trading simply means that you have not planned your trades or you are ignoring your trading plan. If your trade fails to be immediately profitable then you should simply accept that this trade hasn’t gone to plan. Avoid moving your trade back and forth as this will negatively impact on your forex trading account over time.

  1. Failure to gain a solid forex trading education

An FX trading education is your armor on the trading platform. There are countless educational resources available so selecting the right one is vital to your success. Choose carefully and never stop educating yourself.

What are the benefits of trading CFDs? Know in detail

Contracts for difference (CFDs) are used to profit from the difference in the opening and closing prices of a financial instrument between the time a contract is open and when it is closed. The market for trade is chosen by the investor and they open a CFD instead of making a physical purchase. CFDs offer significantly greater leverage compared to traditional financial or commodity trading and have grown tremendously in popularity amongst traders because of their numerous advantages.

The Benefits of Trading CFDs

Often described as ‘share trading with bells and whistles,’ CFDs are ridiculous to understand and to trade. CFD trading is essentially the same as traditional share trading with concurrent movements in CFD and share prices.

  • Trades can be executed instantly and the dealing room is available round-the-clock for five days a week.
  • CFDs can be used to earn a profit regardless of market conditions. A trader can profit from rising prices by “going long” as well as from falling prices by “going short”. This is a huge advantage given the current volatility of financial markets around the world.
  • There is no expiry date attached to a contract for difference. Traders can hold CFDs for as long as they like or sell them quickly if they so choose. CFDs will not become worthless with the passage of time as other financial derivatives are wont to do upon expiry.
  • Traders can open positions with deposits or margins ranging as low as 1 to 20 percent of the contract value instead of paying the full underlying value. The advantage of gearing, or being able to trade on margin, is that traders have cash available to invest elsewhere while still enjoying trades of sizable positions.
  • Perhaps the biggest advantage of trading CFDs is leverage. Granted, it is risky to do so but the enhancement in returns and the levels of market exposure achieved are benefits not easily ignored.
  • CFD trading is not only profitable, it is highly convenient as well as stocks, indexes and commodities can all be traded using a single trading account.
  • Another attractive feature of CFDs is that traders can choose the number of shares they want to trade at instantly tradable prices and get confirmation of their trades at that level except for unforeseen or unfortunate instances.
  • CFDs are also a popular way of hedging investment portfolios where investors do not wish to liquidate their physical stock portfolios.

The benefits of CFD trading are numerous, and so are the reasons for its popularity among investors. CFD platforms are generally quick and efficient, generating daily statements and regular online account reports. CFDs are not bound by the restrictions common to other financial products and are widely available as well as being easy to understand.

Contracts for difference can also be used to hedge other investments and provide diversification to an investment portfolio. They act as insurance against price falls in other investments and offset the losses incurred from the fall in the value of a portfolio. Trading in CFDs also provides retail investors with unprecedented access to global markets such as oil or precious metals and allows traders to speculate on individual sectors from a particular trade as well as on whole indices.

Best Metatrader Indicators for Beginners

There is no ‘right’ or ‘wrong’ when trading forex, as success comes down to a variety of factors such as risk management, budget, and trading systems. One of the many ways to boost your forex trading success is to learn about the range of forex indicators available to you and understand how to utilize the best MetaTrader indicators as a beginner.

Forex indicators help traders to construe which direction a currency will travel in. They indicate whether the price movement is likely to appreciate or depreciate, giving them greater analytical and technical scope during trading.

There are countless forex indicators to select from and it is recommended that you use a handful of them to enhance your chances of success. When used correctly, forex indicators and charting software can certainly pave the way for forex trading success.

Trend Following Tools: One of the Best Metatrader Indicators

One of the easiest and most profitable ways to use forex indicators is to use a Trading Chart that follows trends. This is one of the many forms of technical analysis available to traders.

The purpose of trend-following tools is to establish whether you should be entering into a long or short trade. This can be achieved by using charts to identify major crossover trends in the market over a particular number of days (e.g. over a 10 day/30 day crossover or a 50 day/200 day crossover).

Charts designed for this purpose do a clear job of identifying a trend, giving traders a lucid picture of whether they should commit to a trade on a long or short-term basis.

Use Trend Confirming Tools

Though trend-following tools are useful, a trend-confirming tool can also be used to see if the trend-following tool correlates with the trend-confirming tool. If both tools indicate a bullish trend (uptrend), then a trader can more confidently trade long on their chosen currency pair, whereas if the tools indicate a bearish trend (downtrend), the trader is more likely to sell short.

Use Moving Average Lines and Average Directional Index

To further establish whether a trend is bullish or bearish, you can make use of Moving Average lines. This information is available at a glance, enabling decisions and to be quickly made and trades to be quickly executed.

The Average Directional Index (ADX) demonstrates how strong a trend is. By using figures to represent how well the currency is trading (e.g. an ADX about 40 indicates a strong trend), traders can establish the most precise time to buy or sell a currency at a given moment.

An astute level of technical analysis using forex best MetaTrader indicators will support your trades, boost your reaction to the movements in the market and increase your trading confidence.