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Recovering from Losses in Forex

One of the toughest things in Forex is dealing with lost trades. You will have them, even if you have a great system, which is proven in testing and which you have been using successfully for a long time. There is no such thing as a fail-proof method, and while you should be doing everything you can to never lose a Forex trade, you also need to have some plan for how you are going to deal with losses when you do lose trades. Many people have managed to destroy themselves simply by not knowing how to deal with failure.

When you lose a trade, you will probably experience a range of negative emotions including anger, fear, and confusion. You may think that you are doing something wrong — which may or may not be true. You might be tempted to blame your method, yourself, or your broker. But what is best to do is to hold off on the blame for a moment and take a look at what is going on from an objective point of view.

Look over your trade and consider the setup, the context, and why you lost the trade. Was it a bad entry to begin with? Or did you simply exit the trade at the wrong moment? If you got out early or late at a loss, why did you make that decision, and what decision should you have made? In the majority of cases, you will probably find a mistake which was yours, or a way in which your method could be improved. Any changes you make to your method should be tested before you go live with those adjustments.

In some cases, you may not actually figure out why you lost the Forex trade. Sometimes you can do everything right and still lose. This is again because there is always some degree of chaos, and no method is 100% perfect. You should not expect it to be, and the worst thing you can do when this happens is to make a lot of changes to your method when it already works. Sometimes, this can just result is destroying your method and turning it into something that does not work and includes more randomness instead of less.

You are only human, and your system is designed by you, which means it will be imperfect too. It is important, however, to recognize a good thing when you have it, as well as recognize when it can be improved. If you cannot figure out what is wrong, take a break from Forex altogether for a few days or weeks, and then return to it and do some demo tests to see if the issue has passed. Sometimes, taking a break and letting your thoughts and emotions level out is all it takes to either discover the discrepancy or start trading well again. You may feel a lot of pressure to take trades every day, but this is not necessarily the best route to Forex success. It is better to take a slower, steadier approach which is going to have great results.

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