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Handling Losses on the Foreign Exchange Sydney

Handling Foreign Exchange Sydney Losses

When you trade on the foreign exchange Sydney you need to be able to handle any losses that you make.  Losses are something that all traders are going to go through and you need to be able to handle it when it comes.  These are a number of points that you have to consider when you look at handling losses on the foreign exchange Sydney.  You need to know how to limit the impact of the losses, how to analyse why you are making a loss and how to overcome the mental aspects of the loss.

Limiting the Impact of Losses on the Foreign Exchange Sydney

The first point that you need to look at when you consider how to handle losses is how you can limit the impact they have.  A loss is much easier to handle when it has not had a large impact on your trading account balance.  The best way to limit your losses is to employ stop loss orders.  These orders should be included in all trades that you open on the market and should have logical placement.

The placement of the stop loss orders should be linked to your trading strategy and your risk management plan.  Certain strategies call for tight stop loss orders while others need wider stop loss orders.  If you are using a trend strategy then you should have a tight stop loss order, but if you are using a range strategy you probably need a wider stop loss order.

The risk management plan that you have should detail the amount of your trading account that you are willing to risk with each trade.  Most traders will set this at 2% of their trading account, but other traders will set this at 1%.  The amount you use depends on your risk tolerance and the amount of capital you have.

Why You Made a Loss

Once you have limited the impact of your loss you need to know why you made a loss in the first place.  There are times when a loss comes from an unexpected movement in the market.  At these times there is very little that you can do other than accept the loss.  However, there are other times where the loss comes from a bad trade or a mistake you have made.  To determine if this is the case you need to review your trading journal.

When you review your trading journal you will be able to see whether you are diverting from your trading plan.  This is one of the most common causes of market losses.  If this is the case you should find out why you diverted and whether this is a regular occurrence.

Handling the Mental Aspects

Losses on the foreign exchange Sydney impact your trading account and your mental state.  You need to be able to handle the mental aspects of losses to survive on the market.  You should look into having a routine that you follow after a major loss.  Most traders find that taking some time away from the market helps with handling the loss.  This time away from the market allows you to calm down and to regain your mental equilibrium.

 

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