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Stop Losing Money in Forex Trading
Written by: PaxForex analytics dept - Friday, 13 April 2018 0 comments
Just because forex is easy to get into doesn’t mean that due diligence can be avoided. Learning about forex is integral to a trader’s success in the forex markets. While the majority of learning comes from live trading and experience, a trader should learn everything possible about the forex markets, including the geopolitical and economic factors that affect a trader’s preferred currencies. Homework is an ongoing effort as traders need to be prepared to adapt to changing market conditions, regulations and world events.
All of us experience losing trades, it is just part of being a trader, but if you are finding that you are losing more money than your making and you don’t know how to stop it, you probably have some bigger issues that you need to face and fix before you can stop the bleeding. The main reason why most forex traders lose money is that instead of consciously controlling their emotions in the market by preempting all aspects of their trading, they get caught up in a game of emotional trading, mostly because emotional trading is easier to do and offers more excitement than disciplined, controlled trading.
If you want to attain the proper forex trading mindset and really master your own emotions when interacting with the markets, you will first need to understand and implement proper forex money management. The reason why so many traders become emotional when they trade is usually that they are either risking too
much money or trading too frequently. When you risk too much money per trade, you inherently place greater meaning on each trade, since you have more to lose; this naturally causes you to become more worried about the trade and more emotional in general. Once you induce this type of emotional trading, it works to feed on itself and cause more emotional trading.
When you find yourself over trading, what you are really doing is acting emotionally and gambling. Thus, in order to stop over trading in forex, you have to learn to control your emotions by having a detailed forex risk management plan that also includes specifics on how you can avoid overtrading. Perhaps the best way to avoid overtrading is to know exactly what you are looking for in the market and always take some time off from the markets after every trade, whether it’s a winner or a loser.
The worldwide forex market is attractive to many traders because of its low account requirements, round-the-clock trading and access to high amounts of leverage. When approached as a business, forex trading can be profitable and rewarding. In summary, traders can avoid losing money in forex by being well-prepared, having the patience and discipline to study and research, applying sound money management techniques, approaching trading activity as a business etc.