Learning How to Lose Money

Filed under: Learn Forex Trading |

Picture 1The title, ‘Learning How to Lose Money’ might seem like a strange title, but trading the forex markets is a strange business; and as odd as it might seem, learning the right way to lose money is key to being profitable in the forex markets.

 

Most beginners to forex trading find taking a loss of say, $100, extremely difficult – especially if it happens in a matter of minutes. But to a professional trader, this is merely an overhead, a cost of doing business, and the professional trader will feel nothing (or perhaps very little) in the way of emotion when seeing this result.

 

‘How can you not react to losing money?’ you might ask. Well, knowing that this is a part of the game, that it is two sides of the same coin, certainly helps. Knowing that you cannot make a profit without taking a few losers along the way helps to keep most traders going – knowing that a winner is around the next corner to wipe out all of the losses and more. However, during periods of large drawdowns, things can sometimes get a little sticky.

 

The main thing to try to remember during any drawdown is to try and do the same things that you did when you were being profitable, It is so easy to change your trading methodology and outlook when things are going badly, but all this tends to achieve is to dig a bigger hole. Keep doing the same things that you did when you were making money, and things will inevitably turn around. Periods of highs and lows (with regards to your equity) are inevitable in the world of forex trading, and keeping your emotions in check is key for long-term success. Learning to take losses takes time, but after a while, it all becomes ‘business as usual’.

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