Risk Management - When to Cut Losses?

No matter what your experience in forex is, you have to work really hard to minimize the possible losses. It is far from one-time deal, since you are required to follow your risk management strategy on daily basis in order to grow your forex trading profits.

Unfortunately, most beginners and even quite a few experienced traders are simply unable to control their emotions and let the greed take over. The result is quite tragic – these unlucky traders grasp the losing trades in hopes that the market will astonishingly turn around and make all of this misery just a bad dream.

Some even more unfortunate traders not just hope but start changing their stop loss levels without decent explanation or logic.

Greed. This is one of the major challenges to overcome. In order to fight it, trader must perform the following checkup:

Recognize a bad trade.

Exit the Bad Trade no matter how large the temptation to stay in and hope for the best is.

Realization

But, first thing first. How do you recognize a bad trade? What are the signs of a seemingly good trade gone wild?

Too Close to Potential Reversal Point

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If you put a long order at a resistance level or put a short order too close to a support level, you are in trouble.

News Release

Certain news releases can be catastrophic to your trading day, making the price of the currency pair traded go completely opposite to the open position.

Same Same, but Different

If you see that the open trade isn’t performing good and the currency involved doesn’t do any good in other pair combination, it is time to pull that plug and get out.

Action

Now that you have detected a losing trade, the next step is necessary – quit that trade as soon as possible. This requires a lot of psychological strength, since when your money is involved and you were planning to today, it is hard to realize that things might not be going your way today after all.

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Get out of the trade and walk away from the computer. Go take relaxing shower, meet with your friends for lunch, take your dog for a walk and watch Grey Anatomy (not necessary in that order, and not necessary Grey Anatomy… just an example which works well for me!)

You see, once you lost money, the only thing you will be thinking of is how to recover from this downfall. You will seek trading opportunities in unjustified situations. You will long to trade more to “cut losses”, you will go out of your mind with more bad trades!

The only solution is to close the trade immediately and walk away. Don’t ever try to win that money back immediately, because that will only cause more loss. Do the damage control and take time out. Tomorrow is another day. Tomorrow your head will be clear again to make proper analysis of the market and make logical decisions.

Choose Top Online Trading Brokers

You have decided to be a part of forex market and now it is time to find the best online forex brokers available. What are the best brokers today? What are their top features? How to review a broker and choose the one that suits you the most?

This website presents comprehensive guide for online forex trading with latest reviews on trading platforms, minimum deposits, leverage, customer support, currency pairs spreads, bonuses, competitions and other broker features.

Today you have an access to the market that was not long ago available only to big investors and banks. Brokers allow you to trade large amounts of money with minimal capital using leverage options. With as little as $100, you can take advantage of the global market that almost never sleeps!

Demo accounts are largely advised for beginners. Here you can take a moment and get to know trading without potential risks and liabilities. Without making any deposits, online trading brokers allow you to take advantage of virtual practice accounts to learn the basics and set up strategies.

Most of the brokers today provide educational materials, including videos and webinars where you can talk one-on-one with experts and ask any kind of questions. Daily analyses are available on the brokers’ websites and can be set to you via email or sms.

It is important to keep up with the market volatility and change and the only way to do so is to be available to new information and latest news headlines.

Trading platforms today offer intuitive interfaces, professional charting capabilities, wide collection of indicators and other exciting features all at your finger times, easy to use and learn.

In order to manage your risks, forex brokers offer stop loss to prevent undesirable investment pitfalls. And for better money management, there is a feature called take profit which closes your investment position the moment you get to the profit you have preset. These two options allow you to feel confident about trading.

Forex offers reviews that bring the advantage of each broker to your attention. Our team of experienced traders have tested and traded with the listed brokers to ensure that they meet the professional standards.

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