Begone, Forex Losses!

In trading forex, you are a one-man or woman show. There is no one to blame but yourself unlike in a traditional business where you have your employees, inventory, and assets. A pang is felt when losing trade because you lose your money like in a typical business when it goes under. Static factors and trend-independent profits are included in the archetypal business model and flow. In certain instances, however, specific factors disrupt the margin, but the monetary investment is free of risk in most cases. On the other hand,  trading in the Forex market’s Metatrader 4 platform does not guarantee any profits nor do risk-free capitals exist. The reason being is the possible random change in the trends and does not forget to factor in the elusiveness of profitable trades. Investments are not safe and therefore are open to being traded in the forex market. Stated below are the types of common forex losses that are transpiring in the business and added tips to avert the defeats.

A Loss from a Profitable Trade 

A trader of any level from beginner to an expert will find this to be the most depressing loss. A trader gets ahead of herself and projects the assumed target market which is absent. She thinks that her trade will produce a respectable profit. Unfortunately, the market nosedives and reaches the stop loss. Sod’s law is at play here meaning whatever could go wrong can go wrong. Prevention is always the correct step here and traders must accept the results whether positive or negative.

Tip to avoid this?

“Cut your losses short, and allow your profits to run”. That is a ubiquitous quote in the trading community. Ergo, it would be prudent to set a stop once an optimal move has been made in your favor instead of closing a trade with meager profits.

Begone, Forex

A Loss that originated from a Neutral Trade 

A myriad of reasons can stem from a market steadily positioning at any price point for an extended time frame. The reasons vary from trend consolidation, reversal, low volatility, or the next move’s cue is being awaited by the market. Given the cue handed to the trader, he or she can ascertain with ease that the market is capable of moving in either direction.

Tip to avoid this?

In the game Monopoly, this instance is the peripeteia for the trader to get out. The trader may leave the trade at a cheaper price with only the cost price then enter again when the market leaves its stationary point.

A Loss Exacerbates to a Massive Loss 

This is a novice mistake as old as time. The classic disaster is due to failure to predefine a stop-loss order in the Metatrader 4 platform. Essentially, the trade result is losing, but the trader expects the result to turn around with time. Unfortunately, the loss margin grows wider and the trader becomes desperate. This will all spiral down into negativity for the trader and can destroy the confidence level of traders and their trading account’s deposit.

Tip to avoid this?

Always remember to set a stop-loss order or tell your broker to. If in case you forget, cut your losses and exit the trade prematurely at the early sign of loss.