How to recover from the big losses at trading
A disciplined trader never faces a position at which he may suffer from huge loss. Generally, colossal failure wipes out the trading capital’s big chunk. Therefore, according to the general rule, the trader on any trade should not risk more than 2-3 percent of his overall capital. It is a money management rule that risks capital’s 2-3 percent on a trade; do not lose more than that. As a result, the dealer will face slight loss if they occur.
However, rules and reality are different; even the disciplined FX traders can face heavy losses on a trade occasion as sometimes they continue to trade out of control.
For example, in a particular situation, the traders are highly confident that the currency pair will down, but their prediction can go against them, and the price may rise. Therefore, the trader will add new positions continuously as the price is moving higher.
However, sometimes the trader’s prediction becomes true, and they become lucky, and in these scenarios, the price will fall eventually. But if the reverse happens, it may wipe out the most significant part of your capital.
When the traders with one catastrophic trade lose a tremendous amount of money, sometimes recouping the loss may be extremely difficult for them. But this situation needs to handle carefully. Not all these situations last long if one can maintain them carefully and technically.
Be prepared to lose trades
Most novice Forex and stock traders are not prepared to accept the losing trades. Thus when the trade goes wrong, they become frustrated and start taking trades with high risk. But this not the way professional traders execute their trades. Smart traders at Saxo always trade the market by considering the worst-case scenarios. Thus they can accept the losing trades without going through mental stress.
The Way to Recover Losses
Retaining discipline is essential for a trader when he faces heavy loss. If a trader owns a profitable trading strategy, he needs to make every trading effort and stick clearly to your system with the same money management rules. Losing a lot of money is not a nice feeling, but the dealer should avoid chasing the losses; otherwise, your restlessness will result in more money-losing for you.
Forex trading’s one of the benefits is that you can recoup your significant losses, and it’s possible with the help of leverage. You need to stick with the risk management system if you have a reward/risk ratio of 2:1 or higher. Just apply the stop losses theory and keep pushing away.
You may need years to recover your losses if you invest in stocks. However, if all your capital wipes away because of the failed trading strategy, one should use different tactics. It’s not the idle time to return to the market. It’s time to focus and analyze your system and take a long hard look at it. Try to determine the failure reason and determine how it can work. Moreover, the critical point should be consistent profit in the future without facing any losses.
You may need to completely abandon your previous strategy and step forward with a completely new approach to be profitable over time.
Final Thoughts
The critical point is that if a trader suffers from a significant loss, he should not panic at all. The market is always available, so take a break from trading and take a step to clear your head. Emotions and many negative thoughts may affect you, and you may suffer from frustration and anger. But do not be disappointed. Take a step again but before that, clear your head and change the business strategy.
Once you can do this, it all depends on you, and it’s all about the discipline and trading strategy. A sound trading system keeps the losses as small as possible and targets large winning trades. However, using a disciplined approach, it is possible to recover lost and regain the lost capital.
