Some traders end up positively while others are not lucky enough to experience continuous success in Forex Trading. Even the most successful Forex traders do not have the perfect track record with consistent wins. Moreover, it is not the small, routine losses that can hurt their trading but the big ones. One thing about these big losses is that they are unexpected and most of the time counter the strategies of the traders or their trading plans. These big losses are also known as big anomalies and therefore, they are totally dangerous.
How To Keep Things Steady Amidst These Big Losses
Most traders tend to protect their trades by using several stop losses. They are doing this to keep their accounts from getting impacted when a sudden movement of the market comes along. But, unfortunately, big losses aren’t expected. It is a sudden, unexpected move and you might not be prepared for it. Traders make mistakes, even those who have long experiences in the Forex market but not everyone is capable of admitting their mistakes.
Where do these big losses start?
Basically, the root of the problem is very basic – traders tend to take on too much risk. If you really want to attain success in trading, you need to understand it more so you won’t find yourself in that situation.
Getting Too Greedy
Getting too confident with your trades can sometimes be harmful. Once you become too confident, you will dare to enter a trade that has a bigger risk placed on your profile. They simply think that they know the market all too well. Then, they buy even more than what they should. Though this is considered a mistake of newbies, even professional traders tend to commit this as well.
Not Able to Get Out in Time
One of the biggest mistakes a trader can make is moving their stop loss and not being able to get out in time before the big loss happens. Most of the time, these decisions are made out of emotions. The trader thinks that the market will recover soon but eventually, it didn’t and it got even worse. Since the trader has so much to lose on the trade, eventually, he can’t easily close it out. Instead of becoming profitable, the trade eventually turned out to be a huge loss.
The reason why you utilize stop loss is to avoid incurring big losses. But because you kept on moving your stop-loss order, it impacted negatively on your trades. If you keep on moving your stop loss, you will become prey to the temptation to avoid a loss. But, what you are doing is risking your positions being stuck in a much bigger losing trade. Unless you are ready to take a seriously big loss, it is much better to avoid moving your stop-loss order.
The biggest rule in FX trading is keeping consistency. Long, consistent profits can only be achieved with consistent trading and not simply killing one trade or hoping that the market will turn towards your original plan.