When you take a loss on a forex trade, the plain fact is you’re making an admission that you were plain wrong. And that’s uncomfortable – and that’s when all the avoidance mechanisms kick in. We all, on occasion, are good at hanging in there too long just avoid have to admit the screw-up.

So why is it going to get better?
Hanging a bad position round your neck will suffocate you slowly. Better to cut it free and then you really can begin the process of learning then forgetting. Yes, learn from mistakes, it takes a bit of steel to go back and have a close look at what went wrong – it’s painful, no doubt about it – then keep the lesson and forget the feeling.
If you don’t, you’ll carry it for a day or two, and then – usually – your broker will do the job for you, like it or not. And those 2 days won’t have made you enjoy forex trading any more…

Don’t compound the error
The standard advice is “Don’t ever move your stop-loss order on a trade – unless it’s to lock existing profits”. Assuming you’ve made some estimation of the risk before placing the trade, why increase risk in a bad position? That’s hardly making sense – I can think of reasons to increase risk in a good position…
Compound your stake (in due time), not the error…

Was it your fault?
Markets do things that they’re not ’supposed to’. Events can strike out of a clear blue sky, forex indicators have been known to be misleading, however much skill you feel you have in their interpretation.

• Trading is not personal, it really is only business. Not even the evil gnomes at your broker’s office are going to be sitting there cackling at your expense, they’ve got other people to scam….
• It doesn’t mean that you as a human being are totally worthless… one, two, three trades don’t reflect on you as the complete person.
• So you’re going to be brave and stick in there… Bravery and stupidity? Often pretty damn close together…
• Everyone has made a loss – George Soros has made 5 losing trades in a row (and if he’d like to persuade me otherwise…).
• In just the same way as one winning trade isn’t everything – you’re not going to retire on one good trade – a bad trade just has to be added into the hard grind over months and years – it’s the long-term performance that defines success or failure.
• Wait for tomorrow to come – have another go.

3 Responses to “Forex trading – taking a loss”

1. Reya says:

   January 20, 2009 at 2:13 pm

   5 losing trades in a row? Has George Soros been in touch yet? – I’m sure you’re right

   Reply
2. Forex » Forex trading - taking a loss says:

   January 20, 2009 at 2:16 pm

   [...] Hanging a bad position round your neck will suffocate you slowly. Better to cut it free and then you really can begin the process of learning then forgetting. Yes, learn fro [...]

   Reply
3. Forex trading - taking a loss says:

   January 20, 2009 at 2:16 pm

   [...] Original post by ForexPerform [...]

   Reply