How to reverse defeat into victory in forex trading.
“Great people are not people who never fail, but people who can always rise every time they experience failure.” Maybe we often hear motivational sentences like that.
So, we don’t need to be discouraged if we experience losses in forex trading once in a while. What determines whether we will come out as winners or losers is how we learn and receive “blow by blow”. Then with a certain strategy turning it into a glorious victory. Yes, forex trading is indeed like that. Several times loss is a very normal thing.
Of course, to distort conditions is not something that can be done quickly. We need knowledge, patience and discipline which is enough other than – of course – the strength of sufficient funds.
Keep in mind the next explanation, so that it becomes provision when we want to change “defeat” to “victory”.
Remember Cut-Loss in forex trading.
Immediately close our forex trading platform, if the position is not as expected. Often mistakes made by a forex trader are to let his mind be controlled by a feeling of “revenge” after experiencing a loss. In a hurry, forex traders will find ways and opportunities to be open, and as quickly as possible turn the situation into a victory.
Loss is painful, but we need to be aware that every decision needs to be made with a cold head. If forex trading with emotional conditions, it will be difficult to remain objective in making decisions. We will tend to miss a few important points in our analysis because we don’t want to be left behind and we want to “pay” for our losses just now. This will burden you both your thoughts and feelings, so that you can cause losses again, and this is dangerous.
Then the most appropriate step is to immediately close our forex trading platform after experiencing losses. We can only return to fight if the losses that have been lost are no longer imagined when we want to make a transaction.
Reset Forex Trading Plan
In this case, what needs to be reset is the risk limitation in each transaction. If we determine the amount of risk that can be borne in each transaction is 5%. Then also apply the 5% from the condition of the last fund we have.
For example, if the previous fund is $ 1,000, it means that 5% is $ 50. After experiencing loss, the funds in our account become $ 950. So if we want to return to the transaction, the risk limit is $ 47.5. Now, with such a fund strategy, we will have more “ammunition reserves”.
The illustration is like the following table:
Based on the table above, we have a “ration” of 10 (ten) “shots” before the total loss reaches the maximum risk limit. Even so, if the ten transactions that we do end in loss.
Noteworthy is that if we trade in a normal style (for example swing trading). So the “reasonable” risk limit was stopped at the 10th transaction. Why? because the smallest “swing” that occurs in the average forex price movement is in the range of 300 pips. If we enter a position with 0.1 lot, then that is equivalent to $ 30.
Compare this with if we use funds that are smaller than that, for example $ 500.
It can be seen that with a 5% risk per transaction, the risk limit set is very “tight”. In the first transaction we have only 250 pips. For forex trading, the risk limits like this are very narrow. Can only be done by those who are very experienced in forex scalping and certainly have a high “flight hours”.
To be able to trade forex in a normal style, we can’t help but increase the risk tolerance per transaction to 10%. Thus, our risk tolerance becomes a little more “relieved” at least until the 6th transaction. Passing from the 6th transaction, our trading has entered the “yellow light” area. In addition to the reason that risk tolerance becomes increasingly narrow, losses that may be suffered exceed the maximum risk limits that have been set. Watch Out.
Thus it can be seen that the greater our funds, the more “bullet reserves” we will get.
Evaluation of our Forex Trading Transactions.
Our losses, sometimes caused by our mistakes in analyzing the Chart. Sometimes a signal arises from the forex trading system, or maybe because we incorrectly calculate the position size. For this reason, it is better to evaluate what causes us to lose.
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Have we run a trading plan properly?
These questions will later become the basis for us to judge. Is the loss we experience is good loss or bad loss. If we have done everything correctly but still loss too. So it is indeed part of the risk of trading which – once again – is very normal. By getting used to evaluating, we will actually be able to improve our trading capabilities.
So, have we just experienced “defeat”? Don’t worry, it can be the beginning of the winning step. Keep the spirit.
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