Losing Trades: Cut Your Losses Short

Discussion in 'Trading Journals' started by Kizmi Khan, Oct 17, 2016.

  1. Kizmi Khan

    Kizmi Khan Trader

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    By cultivating a reasonable fear of losing more money, this tends to prompt a trader to take immediate action to get out of losing trades at a small loss, thereby leaving them free to re-assess the market.

    This would be a typical response for a more experienced trader who has learned – perhaps the hard way – that taking a small loss right away is far better than swallowing a large one that may develop by waiting.

    In addition, depending on the flexibility the seasoned trader has in their trading plan and mentality, they might even choose to reverse their original position. They would do this by closing the initial trade and positioning a new trade on the opposite side of the market than they had originally dealt.

    This sort of mental flexibility often requires considerable cultivation, but it can be extremely helpful when trading a market that disagrees with your original directional assessment of it.

    The Moral of This Article is – Use Stop Losses


    Many experienced Forex traders will regularly place stop loss orders as soon as they initiate a trading position. This provides them with an effective way of limiting any trading risk to their portfolio that might come from an unanticipated adverse market movement.

    While some traders do prefer to watch their stop loss levels themselves instead of entering orders with a Forex broker, this can result in a costly loss of trading discipline, so it is usually not recommended for newcomers to Forex trading.
     
    artfor likes this.
  2. artfor

    artfor Trader

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    Nice article. I'm going to follow you for good news.
     

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