How can avoid loss in Forex Trading?
- Thread starter Coner1980
- Start date
I think most losses are due to the stop being set to close to the entry point. You get stopped out and then the position moves in your direction - without you.
You need to set the stop far away, don't be afraid to take risks.
You need to set the stop far away, don't be afraid to take risks.
Keep your stop at 2% (or less) of trading capital, for a start.
Always assume that each trade will be a losing trade.
At first, start by doing paper trading (sim trading) until you know the software inside out. You don't want to make silly mistakes, pushing the wrong buttons, misreading charts, etc., when under pressure while trading with real money.
Your first live trades should be with the smallest position size only. You will notice that it feels different when trading with real money versus paper trading. Once you get used to trading with real money can you gradually increase your position size. However, always ensure that you have proper money management (risk management) in place.
The problem with this approach, while sound and reasonable, is that you can still blow up your account if you don't keep your losses short.
Of course, that's where the sentence about risk management comes in.
You are absolutely correct, but for a beginner "proper money management" is a rather vague concept, while "do not lose more than 2% of your money" is more direct and easy to understand and apply.
Correct. People have heard of risk management but don't know how to do it. What i can suggest is risk only that much which you can afford to lose.
The biggest problem lies in the attitude. What beginners do is that after facing a loss or two, they panic and think of quitting this market. Instead, one should try to analyze the reason of that loss and try to overcome that for future trading. One should always have a positive attitude if success is to be achieved.