Resolved Question
How do you control the urge to add ( positions and funds) to a losing trade?
This is the typical behavioral finance issue. Often times, i find myself adding positions to a losing trade, and when i over leverage I start funding my account to keep from getting the dreaded margin calls. I'd say 25% of the time it actually helps and the positions start going my way, but 75% i end up completely wiping up my whole account. I always say never feed the beast (in this case it's the losing streak) but it is harder said than done. I should probably be using stop losses but it sounds scarier than it is because we have all seen trades that start by going against us ( too early entry) and then reverse back and go the way we were expecting. and if you exit too early, there is that feeling of arrr.
Any advice?
about 1 year ago
Best Answer - Chosen by Voters
Hi AhlamO,
The reason you keep adding more to your position is because you are emotionally attached to your trades. There are many reasons why you could be attached but the most popular one is because there is real money involved.
I would suggest 2 ways to prevail ....
1. Create a trading system (this will remove the greed and fear)
2. Start small and as your confidence builds with your system ... increase your lots.
about 1 year ago
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Answers (2)
I know how hard it could be holding on to a losing trade, but if you know well ahead of time what you stand to lose and your exact point of entry, you can lessen the emotional and psychological strain. With that said, conjure up a trading plan or system in a trading journal well before you take a trade.
In this trade plan, specify your rationale for entry, your desired entry price, your specific target, your stop loss and the percentage of your account you have at risk. Of course, you should also write down your thoughts (what you did write and what you did wrong) after your trade. It's going to take a lot of work, but eventually, it will make you become a better and more profitable trader.Trading is a skill, and much like any other skill, you need to put sufficient time become an expert in it.
Below are a couple of good examples of these so-called "trade plans."
about 1 year ago
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Hi, what happend to you is so normal and common, but is so out of control. When you trade you need to focus on what the graphics are telling you, you need to make a plan with your strategy, Your strategy should include when to enter, when to exit, the take profit, and you really need to follow it. If you don´t have an strategy, find one because if you don´t have one you are just gambling and thats the best way to lose money.
Is human to involve feelings in your trading, but Forex is like any other business so think about it that way. Sometimes you win and sometimes you don´t but at the end the balance should be positive. So if you have one bad position control your risk and your money, and close it you will have plenty of opportunities to recuperate your money with your forex strategy.
Good luck!
about 1 year ago
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