Successful investors learn to expect the unexpected and modify their trading goals accordingly. There is no such thing as getting continuous profit, and everyone must taste loss frequently, but the strategies should be set with such a concrete plan so that a Forex trader can minimize their losses and optimize their profits. This kind of attitude will not lead to your ultimate doom. Here, we will focus on taking the precautionary measures to overcome trading losses based on professional traders’ experiences, psychology, and scientific research.
Ways to overcome trading losses
1. Setting up a stop-loss limit and analyzing the risk to reward ratio
After opening the trade at the support level, set a stop-loss order to save your capital from loss as a result of a sudden downtrend. Stop-loss limit will close the deal when the market moves against you. Solving the math of risk and reward ratio is a good practice which most of the beginners overlook and become the victims of the droppings. An ideal risk to reward ratio is 1:3, which must be considered during the research phase to overcome financial setbacks.
2. Be consistent
Newbies in Hong Kong tend to change their trading plans and cannot keep their concentration without exercising mental calmness. Having basic knowledge alone will not help to be successful if you lack mental stamina. Without developing a consistent mindset, beginners quit easily to avoid challenges. To overcome losses, being alert to opportunities is very crucial, but amateurs look for shortcuts and ignore feedback and the consequences of their work. Setting potential goals and being strict about them is vital, which may lessen the chance of failure. Another key thing to do is to study the Hong Kong ETF market regularly. It will allow you to keep pace with the market changes.
3. Psychological balance
Greed is considered one of the most commoncauses of failure in trading as amateurs tend to change their stop-loss order when they should not. As a result of greed and overconfidence, investors take a higher lot size to make a greater amount of profit and lose the same amount when the market takes the bearish movement. When investors are controlled by their emotions, they cannot respond to the losses with the same resilience and strength that they had in the beginningof their venture. To get rid of this dilemma, they must be detached from their emotions during trading and keep themselves neutral. The market may crash any time which experts know well and become psychologically prepared from the beginning. Study shows that the key to a successful business is to maintain emotional discipline with intelligence which will help you to take rational decisions. Physical activities such as jogging or walking can sharpen your focus and help you toconcentrate on your goal. Frustration and fear can reduce the confidence of newbies after continuous losses, and they should take a break for a week if things do not go well with them.
4. Changing the approach
After a certain period, traders should change their business approach based on their trading history and the current market situation. Fundamental and technical analysis can help you to modify your strategies, which did not yield the expected result. To achieve financial success, investors must examine their historical performance in the chart and find out what they are doing wrong. They should take records of their last ten worst trades and last ten best trades and then compare that to form the new scheme. They must improve his risk management techniques and should check which time frame is working best – whether it is longer timeframe, or shorter – to get the best potential opportunities in the future.
There is no overall rule to overcomeForex trading losses. However, by adopting good practices a newbie can reduce their losses to a greater extent. Mastering the risk and reward ratio will help beginners to maintain a bulletproof risk management system and reduce the number of unexpected losses in their trading future.