Trading is all about managing your risk factor. If become good at managing the losing trades, you will be able to earn more money. On the other hand, if you fail to deal with the losses, you will keep on losing money. Never expect that you can avoid losing trades all the time. Losing trades should be considered as a part of your trading career and only then you can succeed in the retail trading industry.
In this post, we are going to share some useful insight about the market which will guide you to manage the losing trades like a pro trader. So, let’s get into the details.
Find the cause
After you face a losing trade, you need to find its cause. Without finding the cause, you will keep losing money in the same fashion. Professional traders always maintain a trading journal and they assess their trading performance during the weekend. By doing so, they manage to make significant progress in their life. Instead of bringing radical change to their trading method, they bring a slight change to their trading strategy which fixes the problem. So, if you don’t know the proper way to find the cause of your losses, you will never be able to improve your trading performance.
Have low expectations
The rookie traders fail to deal with the losing trades since they trade this market with high expectations. Being a human beings, it’s very normal that we will be trading the market with high expectations. But we must find a simple way to lower down our expectations and only then we can become good at trading. Never try to become a millionaire in the Forex market without doing the proper research. Take your time and try to consider trading as your business. Once you do that, you will stop trading the market with high expectations and thus you will become more efficient with your trade execution process. If necessary, visit home.saxo and learn more about conservative trading technique. This will encourage you to trade with low expectations.
Aim for high risk to reward ratio
You should always trade the market with a high risk to reward ratio. Without trading the market with a high risk to reward ratio, it is going to be a very tough task to manage your risk profile. Some people think that trading the market with a 1:2 risk to reward ratio is enough. But if you do the math, you will realize, that you have a better chance to make money by aiming for a 1:3 risk to reward ratio. Stop trading the market with a low risk to reward ratio as it will make the overall recovery factor very tough. Try to follow a simple method as it will make you much more confident with your actions and let you trade this market in a disciplined way.
Improve your discipline
The rookie traders fail to deal with the losing trades since they never trade the market with discipline. They keep on breaking the basic rules for trading and loses a significant portion of their trading capital. On the contrary, professional traders always take the trades with strict sets of rules. They know without following proper rules at trading, it will be a very tough task to manage the risk profile. So, try to improve your discipline by using a trading routine. But do not make the trading routine overly complex. If you do so, you will also lose money like the rest of the trades.
Accept the losing trades
As a currency trader, you should have the mental strength to accept the losing trades. Never think you can beat this market without learning to deal with the losses. Once you become good at embracing the losing trades, you can deal with your stress in a much more structured way and this will make you a confident trader in the long run. So, do not lose hope, if you face a loss from the best trade signal.