Managing the losing trades is the most critical step in the Forex market. Being a new trader, you might not have the emotional stability to deal with series of losing trades. You will become emotional and try silly things to recover the losses. At times, such actions will help you to cover up the losses. But in most cases, you will make the situation much worse. To survive in the Forex market, you need to teach yourself the proper way to deal with the losing streaks. If you can do that, you can expect to become a better trader within a short time. Let’s get into the details.

 

The famous 1% rule

You must have heard that you should not risk more than 1% of your account balance in any trade. If you do so, you will be in great danger and you will lose money most of the time. The only way by which you can protect yourself from big losses is by following the 1% rule of money management. While taking the trades, you need to evaluate the worst-case scenario. Think twice before you take the trades and take logical steps so that you can earn more money. Stop being an aggressive trader as you are not in a competition to make a big profit. Once you lose a small portion of the account, you will learn to withstand the losing trades without getting emotional.

 

Trade with a big capital

One of the key reasons for which novice traders are losing so much money is the lack of trading capital. They trade with high risk to make more money. They are continuously looking for trade setups so that they can turn their small trading account into a big one. But not all of us can start trading with big capital. In such a case, we need to train our minds that we have to go slowly in this field. If we trade with high risk, chances are high that we will blow up our small trading account within a short time. Focus on the size of your trading capital to reduce the losses. Search with the term Forex Australia to get a clear concept on this business. Soon you will realize why it is important to trade with a big capital.

Develop a robust strategy

You need to have strong faith in your system. Even if you lose 10 trades in a row, never get frustrated with your actions. You have to believe in yourself and trade this market with strong sets of rules. Failing to manage the risk profile will put you at great risk. Look for the trade signals in a very strategic way so that you can cover up the losses. The minimum risk to reward ratio in the trades should be better than 1:3 and only then you can expect to withstand the losing trades. Try to keep the winners bigger and cut the losing trades early. But make sure you are not closing a deal too early. You have to find the exit point for each trade based on some technical factors.

 

Avoid trading the news

News trading is another key reason for which people are losing so much money at trading. To protect your trading capital, you need to find safe trading hours. After the news release, the market becomes volatile and it becomes tough for the investors to trade with tight stops. By avoiding the news hours, you can easily protect the trades from false spikes. Though some of the experienced professionals are trading the key news event, they have in-depth knowledge about this market. Unless you have such skills to deal with the news factor, you have to look at the critical market dynamics in the stable hours only. Never get motivated to trade the major news thinking it will allow you to recover the losses.

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March 19th, 2021 by financetwitter

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