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Dealing with your Losses in Forex Trading

One of the most important rules of Forex trading is to keep your losses as smallas possible. With small Forex trading losses, you can outlast those times when themarket moves against you, and be well positioned for when the trend turns around.The one proven method to keeping your losses small is to set your maximum lossbefore you even open a Forex trading position.The maximum loss is the greatest amount of capital that you are comfortable losingon any one trade. With your maximum loss set as a small percentage of your Forextrading effort, a string of losses wont stop you from trading for any particular amountof time. Unlike the 95% of Forex traders out there who lose money because theyhavent implemented wise money management rules to their Forex trading system,you will be ok with this money management rule.To use as an example- If I had a Forex trading float of $2000, and I began trading with$200 a trade, it would be reasonable for me to experience three losses in a row. Thiswould reduce my Forex trading capital to $800. It would then be decided that theyregoing to bet $400 on the next trade because they think they have a higher chance ofwinning after having lost three times already.If that trader did bet $200 dollars on the next trade because they thought they weregoing to win, their capital could be reduced to $500 dollars. The chances of makingmoney now are practically nil because I would need to make 150% on the next tradejust to break even. If the maximum loss had been determined, and stuck to, theywould not be in this position.In this case, the reason for failure was because the trader risked too much money,and didnt apply good money management to the play.Remember, the goal here is to keep our losses as small as possible while also makingsure that we open a large enough position to capitalize on profits and minimizelosses. With your money management rules in place, in your Forex trading system, youwill always be able to do this.

| Modified: May 3, 2017 | Author:

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