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Forex – Coping With Trading Losses

The foreign exchange (FOREX) market has proven to be quite a dynamic arena. While impressive fortunes are being made by some, substantial losses are being experienced by others.. If you are a FOREX trader, here are a few tips to help you deal with your trading losses. Let’s think of them as the ‘Four R’s’.

Rule Out Broker Fault
One of the first things you want to do, particularly if you suspect a malfunctioning trading platform, is call the broker about the problem. Most online brokers have a 24-hour tech support or help desk to accommodate traders in this around-the-clock market. You owe it to yourself to be certain that the reasons for the loss are solely yours and not due to broker error. For example, a broker’s platform may sometimes freeze up if the trading traffic is too overwhelming for the IT infrastructure. If this does happens and your trading position is adversely affected, then a call to the broker is strongly urged. Make screenshots of your trade and note all relevant timestamps for your record and to send to the broker. Do not be dissuaded by statements to the effect that ‘there is nothing we can do about it, as it was a computer malfunction’. Well, guess what! Computers are programmed, operated and maintained by humans. Most reputable brokers will try to work something out with the trader if the cause turns out to be the broker’s fault. If you can prove your case here and the broker cannot provide adequate explanation to the contrary, there is no reason you should not be able to get a credit to your account.

Review Your Trade Strategy
Besides the constant vagaries of the market itself, a loss will usually be attributable to the fault of the trader. All traders will experience loss over time. It helps to make sure that the trading strategy you are using is a viable one, which was thoroughly tested before use on a live account. If the strategy and the execution of it need tweaking, then take the necessary steps to address the same, including proper testing before implementation of the fine-tuned version.

Reset Your Risk Management Tools
It is highly advisable that you use stops and trailing stops for your trades. While these may not necessarily prevent losses, they help to minimize them. If your stops are improperly set, you may experience a loss greater than you otherwise would have. Again, testing the new settings is critical prior to inclusion in your overall trading strategy.

Reach Out To A Mentor
Everyone involved in any worthwhile activity of life needs a mentor at some point. Trading the FOREX provides no exception. Therefore, if you find yourself losing all too often, do not hesitate to consult with a more experienced trader. Perhaps this individual could be the person who previously trained you, a well-respected figure in an online forum, or someone you hire to give you more skilled direction. Whatever route you decide to take, remember, you do not have to be alone in your times of frustration. Keep in view the total trading picture and not be derailed by one or two trades. The right attitudinal response following a loss is preparatory to ultimate success.

Sandy Robinson, J.D., Copyright 2007

By: Sandy Robinson, J.D.

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If you are ready to change your future by stepping into the exciting world of trading FOREX, go to www.winningtradersassociation.com for more information. Author Sandy Robinson, J.D. is part of the Winning Traders Association, an educational organization founded by John Beiler, President. The organization consists of a network of committed trainers and motivated traders willing to provide support to those interested in trading foreign exchange. Many of the members work from home.