Forex Trading Tips: Secrets to Avoiding Recurring Loss (2)
In the previous article five things you need to pay attention to in forex trading have been discussed. These things are expected to be a guide for you in carrying out activities as a trader.
In the second part, there will be a number of other things that you should know so that you don’t get stuck doing repetitive mistakes that result in repeated losses.
6. Always use “cold money”
After a trader feels ready – of course after going through the learning process and building a trading plan – then it’s time to do real trading .That is, there is money really involved in it.
Please note that the simulation results do not guarantee the same results when real trading . That is, even though the results of your demo account show amazing results, not necessarily the results of your real trading will give the same results.
Why? There are at least two causes.
First, a dynamic market situation. Market conditions may change 180 degrees when you make real trading . Maybe when doing simulations, market conditions are very suitable with the trading system that you are testing, but changes when the real trading has been carried out.
Even so, this first point should not be too annoying if you have been simulating for a long time and actually apply the trading plan with discipline. When the market situation changes, you will know when to stop and watch again when it’s time to return to action.
What is more often the cause is precisely the 2nd point: psychological factors. Often a trader becomes very emotional when trading. Naturally, considering this time real money is involved in decision making. Feelings of fear of losing often often lead to greater and – worse losses – in a row.
Then it is recommended to use “cold money” when trading. What is meant by cold money is the money that you can let go. That is, even if something bad happens to the money (read: LOSS), your life will not be affected. You will still be able to continue living normally despite losing the money. That way you will be able to trade forex calmly.
7. Make notes
Make notes for all the transactions you make. This method is effective to help you evaluate every advantage or loss that you experience.
Indeed, every transaction that you do will be recorded by itself in Account History , but it’s good for you to also make notes especially when experiencing losses about – for example – how the market conditions at that time, whether you are in an emotional condition, and so on. In essence, identify what mistakes you might make at that time.
Traders tend to repeat the same mistakes. By creating a kind of trading journal, you will be able to minimize the possibility of making the same mistakes over and over again.
8. Treat forex trading as a business
It is important to assume that forex trading is a business. Every businessman must be able to think clearly and mature before making a decision, as well as traders.
In trading, the final result is not the main focus. Results are important, but more important is the process .
One of the successful processes of forex trading is the ability to control emotions. Many traders get carried away when they experience losses, also when they make a profit. You must avoid that. No matter how many thousands of dollars your profits today, you still can’t make your head big and underestimate the risks that might arise. Likewise when for example you have just experienced a loss, you should not be a reason to feel afraid to take a decision tomorrow.
Planning, self-control ability, and skillfulness in managing capital and anticipating risks. That’s what a businessman needs. Likewise, that’s what a trader must have.
The Bottom Line
The world of forex trading is indeed very attractive because of the low capital needed, trading that can last 24 hours a day from Monday to Saturday in the morning, and the potential for extraordinary opportunities. When treated as a business, then the forex trading business should also be able to provide great profits. But for that you need to do some things to avoid losses, at least minimize them.
In summary, some of these things you will really need:
– Mature preparation
– Patience and discipline for learning and deepening
– Application of risk management techniques and capital management
– Consider trading as a business