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How to Handle Forex Trading Losses

A smart online Forex trading investor should keep a close record of his trading losses. This is to make sure that the currency doesn’t drop, are updated with its development, and that you have the option to settle trading losses if you start to lose.

To start writing records, first acquire a notebook for the sole propose of online Forex trading record keeping. In this notebook you should write a chart with the following titles:

  • The trading date
  • The Beginning balance
  • The number of trades
  • The pairs traded
  • The strategies used
  • The ending balance
  • Forex Trading losses

In the lines underneath these columns you need to write the dates in which you do your online Forex trading.

Mistakes to Avoid While Forex Trading

Always Trade with a Stop-Loss Limit Order

The most important thing for an experienced trader is to secure his investments and prevent large Forex trading losses. The option of the stop loss will give you that extra protection that is vital for any investor. In Online Forex trading, the investor online is the one calling the shots, so don't be afraid of using this option to secure your account.

Always Trade with a Take-Profit Limit Order

For the same reasons previously stated, the sound investor should always set a reasonable take-profit limit order. If the currency will rise, you can advance and raise your investment without risking the money you have.

Do not Trade Too Many Pairs All At Once

It is hard to follow up with many Forex trading currencies all at once. This is because for each trade you will have at least three charts, making it hard for you to keep track of your investment. There is also a larger probability that one of your Forex trading currencies drops, something that can endanger all your investments. Focusing on a few pairs will cut down, for the long run, on your trading losses.

Do Not Trade Minor Forex Currencies

Trading minor currencies are more risky, and there is more chance of trading losses. It is not advised to trade in the minors because it fluctuates more risking you funds. This is recommended because most online Forex trading is done for major currencies.

Trade with a Plan

Before starting Forex trading, review several charts that will give you more information about the currencies you want to trade in. These include the 5-second, 1 hour, and 1-day charts. Technical analysis and fundamental analysis can also help your trade. When you analyze the charts, try and find out what is the long term direction of the Forex currency fluctuation.

Cut Your Trading Losses Down

Sometimes it happens that a currency you invest in drops. If you notice a trend early on you are better to cut your trading losses and not continue losing more money. This is because of sunk cost- money that you have lost is better to be left and not counted upon.

Jim Barns, Market Analyst

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