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How Do You Cope with Losses in Forex?

April 27, 2015 by

Sooner or later, every FX trader gets struck with an unexpectedly big loss or a line of such losses. Usually, it is just the matter of time and trader’s reaction to the resulting emotional and economical drawdown.

The first thing to do is to get rid of the bad emotions. There are many ways to loosen your mind and to stop thinking about the incurred loss. Getting an emotional discharge through alcohol (do not mix it with trading!), sports, computer games, mediation or prayer is a common method employed by thousands of traders — both professional and part-time. In the worst cases, a trader might decide to start seeking professional psychological help to help him cope with the problems.

Often, especially if the trader failed to channel his negative emotions through something other than the market, there is an attempt to get a revenge on it. Revenge trading is a futile and often perilous endeavor, which is akin to overtrading and leads to even more disastrous results.

Taking a break from trading — short or long — might prove to be a great remedy in and of itself. It will help you too stay away from the revenge trading and will also heal your emotional wounds caused by the recent streak of losses. A good idea may be to increase time spent on learning, reading books and doing all sorts of market analysis. Though, there should be some bounds to it too.

Switching strategy (to a new one) may also be a good idea, but only if you are sure that the resulting loss was a direct consequence of employing your current strategy and that the same or worse may repeat in the future. In a milder case, switching to a smaller position size would probably be a more prudent solution.

Losing everything is not the end of the trading way for some traders, especially so for gamblers. They will just go to a bank and get a loan to cover their losses and probably make some new. Needless to say, trading on borrowed funds is a thing that should be avoided unless you really know what you are doing. But if you knew, how did you end up with such a huge loss in the first place?

My own way to get by when too many positions go in red, normally consists of going off the market for some time. If the losses seem systematic, I proceed to changing my trading strategy at specific points.

How do you deal with big losses in Forex?

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If you want to talk about how you deal with big losses in Forex trading, please feel free to do so using the form below.

2 Responses to “How Do You Cope with Losses in Forex?”

  1. Michael

    There is an easy way to deal with trading losses. Just stay positive DESPITE them. How to do it? Just make some positive inner dialog IMMEDIETLY after taking a loss.

    Reply

  2. Le petit caporal

    Another income not only forex , take break ,relax,meditation,sport,

    Reply

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