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How to keep your losses small when trading or investing

By Edited Nov 13, 2013 0 0

Traders in the investment markets need to learn to keep their trading losses small. Preserving capitol is what trading is all about. No trader like to lose but it happens especially when money is involved. If you do have a lose in a trade you need to learn from that loss. Ask yourself what made the trade go the wrong and think about how you place the trade.

Check your trading plan all successful traders have them. Most profitable traders keep their losses below 40 % over a week or month. On each trade they try and make 2% profit on the trade which is usually a day trade.It is much smarter to think in percentages then dollars.

When you have made a stock or forex trade and it is going the wrong way,you need to cut your loss and exit the trade. Chasing losing trades is a big mistake. You should have already set a stop loss also. If you read the charts wrong or some other indicator it is best to get out of the trade and save your trading capitol. Many times in fast moving markets this will happen especially if news has broke that influenced the direction of the market.

Stock and forex trading is risky so the losses you take should be small if you stick with a solid trading plan and know where to set stop losses. Changing your trading style from hitting the buy button and sell button and moving in and out of positions will lose you money in the long run. You need to look at your position and adjust your buy and exit strategies accordingly. As a trader, you are not guessing on where the trade might be going whether it is a long or short trade,so you are not taking a risk it is not gambling it is a well thought out trade.

A profitable forex or stock trader mental attitude is most important. They have to have a positive outlook on all their trades. This will make you a successful and profitable trader. One of the important parts of not having to many losing trade is the technical analysis and reading your charts correctly.Experienced traders and investors in the markets must use technical analysis as part of their trading program.


Things You Will Need

Look for a good broker that offers low commissions.
Traders that use technical analysis properly can see breakout points, trading ranges, and when to buy and sell signals other traders don't see. Technical analysis helps traders make more proper decisions, thus reducing their losses to minor market movements.

Tips & Warnings

Make sure to use stop losses
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