Losing Trades: Cut Your Losses Short

Kizmi Khan

Trader
Oct 14, 2016
11
4
14
40
India
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.
 
May 10, 2018
8
0
11
44
Thanks for your posts, I am just a noob but I see your posts and which I can do similar things soon. Can you help me with this trade of mine that I lost? I want your insight on what I did wrong below and how I can do better for a trade like below.
 

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patrisha

Trader
Apr 30, 2020
8
3
9
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.
I lost a lot of money in my early years in the market until i learnt this. I am never making that mistake again. I must define my stop loss and take profit before entring any trader. if the market is too volatile for that, then i step aside. Once bitten, twice shy.