Learn Forex and how to deal with currency trading losses

Forex, the term for the worldwide over-the-counter foreign currency exchange market, is the most liquid of all markets. With over $5 trillion dollars in daily average turnover, forex is available for traders, investors, and hedgers 24 hours a day continuously from 5pm EST on Sundays until 4:30pm EST on Fridays, which is enticing to traders interested in using forex as a second or third source of income. Experienced traders are notorious for making forex their sole source of work-from-wherever income. Novice traders benefit greatly from perusing a few books on forex, taking in webinars, and testing out demo accounts on various trading platforms to get their toes sufficiently wet prior to commencing live trading. Before cannon-balling into the waters, new forex traders should have the following key points tucked into that Speedo to make sure profits don’t get sunk in the deep end.

Learn Forex and how to deal with currency trading losses

The Trend is Your New BFF

Learning to understand and follow trend lines is a skill that can make or break any trader, newbie and seasoned pro alike. Trend lines, support and resistance, and breakout signals tell a trader with a clear trading plan when to buy or sell a currency pair.

Play Like a Pro, Win Like A Master

Treating trading like a job, even if only trading for two to five hours a week, will afford an investor the opportunity to observe some of the patterns that occur, particularly during news events such as the release of Leading, Economic, or Consumer Spending data.

Know Thy Margin

Traders looking to start playing with Forex using the minimum investment requirements should be thoroughly versed on how margin and leverage will impact their accounts. Forex traders can elect to open standard, mini, or micro accounts. The margins for micro accounts can range from 1:25 to 1:400, which is wonderful when in the green, but not at all when a Forexer is in the red. The attractiveness of margin trading lies in the fact that a trader can exponentially increase their profits, but the ugly truth is that a trader’s risk of getting a dreaded margin call multiplies as the amount of leverage increases.

Your Platform’s got Legs (and it knows how to use them).

Future Forexers, before committing to a trading platform, should ask themselves if the platform truly has legs. Do the spreads fluctuate wildly during news events? Do limit or stop-loss orders get passed in the chaos? Does the platform ever freeze when placing an order? Flaws and glitches in a trading platform can siphon away profits as fast as a hummingbird flaps its wings.

Bikinis, Track Pants, or Double-Breasted Suit

No matter if trading forex from a backyard kiddie pool, dorm room futon, or a transatlantic flight, these simple tips will give forex traders the edge to flow with the trend like a surfer on the sea. Identifying the brokerage and platform that is ideal for one’s personal trading plan rarely happens overnight. Patience, practice, and continual education will allow traders to blossom from an entry-level exchanger into an upper-echelon currency maverick. And, as surely as the tide rolls in and out, setbacks, minor losses, and the inevitable learning curve will be a part of every individual’s trading experience. Future forexers cannot allow this to divert them from their path to financial harmony, especially not when in their pajamas.

Dealing With Foreign Exchange Trading Losses

While foreign exchange trading is known as one of the most profitable and valuable careers around, even the best forex trader has a negative day once in a while. Whether it’s because of poor market conditions or bad decisions, lost cash is lost cash. And, when it begins to repeat itself, it can really sting.

Everyone reacts to bad days differently. Some foreign exchange traders get depressed and take time off, others increase their budget and work their way through the losses, and others become more introspective as they look at exactly what caused the problem.

There are many ways to react to losses, and even more ways to move on. Here are five of the most common ways forex traders react to bad days and how they pick themselves up:

They Do Nothing

Sometimes it’s just down to chance, and the best solution is no solution. There are down days on the forex markets, and sometimes things can happen that are well beyond the control of traders. Forex traders that understand their markets very well, can go ahead and do nothing after losing one day. However, newbies that start losing money should quickly look over what is going wrong. Confidence comes with success and those who haven’t been at the top shouldn’t take this strategy when they experience foreign exchange trading losses.

They Stop Altogether

Sadly, this is the response that a lot of newbies take. Losing money hurts, especially when they’ve got a thin budget to work with. However, by packing up shop after a single bad day, they leave themselves unable to ever reach the huge earnings that are possible in foreign exchange trading. While hundreds of losing days are reason to stop, one or two shouldn’t put forex trading newbies off long-term opportunities.

They Study What Went Wrong

This is the most common response for seasoned and intelligent forex trading veterans. Instead of blindly working through their losses, many traders look at the situation surrounding the loss and work out what caused it. The best advantage in foreign exchange trading is an information advantage. And, as foreign exchange traders understand what’s affecting their trades, they become much closer to knowing exactly what will help them become more valuable.

They Ask for Help

For newbies, this is a great way to improve foreign exchange trading. At the start, forex trading newbies likely know very little about trading, and admitting that is a great way to help themselves improve. Beginners shouldn’t feel bad if they have to ask for advice or help from more experienced forex traders. Even the most successful forex trading veterans were beginners once and many still remember being in the situation of a newbie.

They Change Strategies

Sometimes, a certain currency just isn’t earning anything. In such situations, the best strategy for foreign exchange traders is to completely change their approach. When struggling with a certain currency market, it might be worth examining what’s happening and consider shifting strategies. For some, that could mean getting out of the specified market altogether while, for others, it could simply involve minor changes in their approach.

Experiencing losses in foreign exchange trading should be expected. On bad days, what matters is not what forex traders lose but how they cope with the situation.

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