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:
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.
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.
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?
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.