How To Deal With Losses In Trading

July 18, 2015 at 2:02 pm

In trading and investing losses are unavoidable. There is just no way around it.

“If you can’t accept losing, you can’t win”  — Vince Lombardi

Every trader and trading system no matter how good generates losses. They are part of the game. Moreover, from time to time losses come in strings.

If a trading system generates 70% of winners, that doesn’t mean that you are going to win 7 times out of every 10 trades. It can be any combination of consecutive wins and losses.

The difference between good traders and failures is in the way they handle their losses. The main points to remember are:

1. Don’t get overly emotional about your losses or wins. Getting emotional about your losses is usually a sign that you risk too much money.

2. Do not increase sizes of your trades in the hope to recuperate the losses fast. More often than not the result is totally opposite and traders lose much more.

3. Do not revenge trade. Your trades will be emotionally base and that is never a good idea.

4. Always use proper money management. Bad money management is the number one cause that novice traders wash out.

4. Stick with your trading system. Many novice traders quit trading after a number of consecutive losses and they do not benefit from consecutive wins once the tide turns around.

“My plan of trading was sound enough and won oftener than it lost.  If I had stuck to it, I’d have been right perhaps as often as 7 out of 10 times.”  — Jesse Livermor

 

Th.-Fr., July 16-17 Forex signals & results: -182 pips

July 17, 2015 at 6:00 pm

This was a rough week for us.

On Thursday there were 2 trades, which resulted in one loss and one win:

From: Dave Hughe <[email protected]>
Date: Thu, Jul 16, 2015 at 8:43 AM
Subject: New order
To:
EURNZD Buy 1.6701 SL 1.66.49 P1= 1.6719 P2= 1.6729

This trade hit stop-loss orders and was a loss of -156 pips.

The second trade was to short the same pair:

From: Dave Hughe <[email protected]>
Date: Thu, Jul 16, 2015 at 8:55 AM
Subject: New order
To:
EURNZD Sell 1.6639 SL 1.6702 P1= 1.6621 P2= 1.6606

This trade reached its 1st profit target and the stop-loss was moved to the break even point:

From: Dave Hughe <[email protected]>
Date: Thu, Jul 16, 2015 at 9:10 AM
Subject: EURNZD P1 reached SL BE
To:

This trade made +20 pips

On Friday we made a few break even trades and 2 trades were closed with small losses:

From: Dave Hughe <[email protected]>
Date: Fri, Jul 17, 2015 at 5:19 AM
Subject: July 17
To:
AUDUSD Sell 0.7393 SL 0.9411 P1= 0.9373 P2= 0.9363

The stop-loss was updated to 0.7401:

From: Dave Hughe <[email protected]>
Date: Fri, Jul 17, 2015 at 6:43 AM
Subject: AUDUSD SL 0.7401
To:

While this trade did reach our 1st profit target later on, we did not want to risk too much and exited for a small combined loss of -24 pips.

The second trade was to short EURGBP:

From: Dave Hughe <[email protected]>
Date: Fri, Jul 17, 2015 at 10:37 AM
Subject: New order
To:
EURGBP Sell 1.6939 SL 0.6975

This trade was not going anywhere and we just closed it at the close to break even price of 1.6943.

Tu.-Wd., July 14-15 Forex signals & results: -51 pips

July 15, 2015 at 5:22 pm

There were no signals triggered on Tuesday. On Wednesday we lost -51 pips.

The signal was as follows:

From: Dave Hughe <[email protected]>
Date: Wed, Jul 15, 2015 at 6:25 AM
Subject: July 15
To:
GBPUSD Buy 1.5641 SL 1.5599 P1= 1.5667 P2= 1.5694

Later we updated to the stop-loss to 1.5624:

From: Dave Hughe <[email protected]>
Date: Wed, Jul 15, 2015 at 6:57 AM
Subject: GBPUSD SL 1.5624
To:

On the chart this trade looked like this:

FOREX-SIGNALS-GBPUSD

 

Mo., July 13 Forex signals & results: +40 pips

July 13, 2015 at 5:20 pm

On Monday we made +40 pips on the USDCAD trade:

From: Dave Hughe <[email protected]>
Date: Mon, Jul 13, 2015 at 6:42 AM
Subject: July 13
To:
USDCAD Buy 1.2755 SL 1.2695 P1= 1.2775 P2= 1.2794

This trade reached the 1st profit target and touched the 2nd profit target. The stop-loss was updated to 1.2765:

From: Dave Hughe <[email protected]>
Date: Mon, Jul 13, 2015 at 10:44 AM
Subject: P2 was practically reached, SL 1.2765
To:

FOREX-SIGNALS-USDCAD

Where To Trade Forex?

July 11, 2015 at 5:02 pm

Usually, when people talk about Forex they refer to the spot market. In the spot market currencies are traded physically or electronically “on the spot” at the current market price.

For an average person, the most practical way to trade Forex is via an online broker. Brokers pair all buy and sell orders and re-sell or hedge the remaining part to other brokers and/or financial institutions. The prices quoted by the broker are usually aggregated from multiple sources and might slightly differ between brokers.

It is also possible to trade currencies via Futures, Options and Exchange-Traded Funds (ETFs) but those markets are out of the scope of this e-book.

When you place a trade in Forex, you are always long or short one side of the pair against the other side of that pair. Therefore, you are always long and short at the same time.

When you buy the EUR/USD pair that means that you simultaneously buy the Euro and sell the USD. When you short the Euro, you sell the Euro and buy the USD.

Wd.-Fr., July 8-10 Forex signals & results

July 10, 2015 at 4:30 pm

There were no signals triggered on July 8 and July 9. On Friday, July 10 we incurred losses:

There were two signals issued:

From: Dave Hughe <[email protected]>
Date: Fri, Jul 10, 2015 at 6:16 AM
Subject: July 10
To:
EURGBP Buy 0.7216 SL 0.7279 P1= 0.7228 P2= 0.7248

This signal was a close call and it was not triggered with some brokers, with other it was and therefore we count it here as a loss.

The stop-loss was updated to 0.7199

From: Dave Hughe <[email protected]>
Date: Fri, Jul 10, 2015 at 7:05 AM
Subject: EURGBP SL 0.7199
To:

This stop-loss was triggered for a combined loss of -51 pips:

FOREX-SIGNAL-EURUSD

Another signal was to short USDCAD:

From: Dave Hughe <[email protected]>
Date: Fri, Jul 10, 2015 at 9:41 AM
Subject: New order
To:
USDCAD Buy 1.2751 SL 1.2674 P1= 1.2771 P2= 1.2783

This stop-loss was later updated to 1.2719:

From: Dave Hughe <[email protected]>
Date: Fri, Jul 10, 2015 at 9:58 AM
Subject: USDCAD SL 1.2719
To:

This sop-loss was triggered for the combined loss of -96 pips:

FOREX-SIGNAL-USDCAD

Mo.-Tu., July 6-7 Forex signals results: +20 pips

July 7, 2015 at 5:42 pm

On Monday we did not get any trades triggered.

Today’s Forex signal made +20 pips profit:

From: Dave Hughe <[email protected]>
Date: Tue, Jul 7, 2015 at 9:11 AM
Subject: New order
To:
USDJPY Sell 122.31 SL 122.66 P1= 122.11 P2= 121.96

Once the 1st profit target was reached, we moved stop-loss orders to the break even point at 122.30:

From: Dave Hughe <[email protected]>
Date: Tue, Jul 7, 2015 at 10:41 AM
Subject: USDJPY P1 reached SL BE (122.30)

This is how this trade looked on the chart:

best-forex-signals-USDJPY-jul7

How To Make Money In Forex?

July 7, 2015 at 5:27 pm

Just like in other financial markets, you profit in Forex by buying low and selling high or by selling high and buying low.

Your profit is the difference between the purchase price and the sale price multiplied by the number of lots traded (see also What Is A Lot, Mini-Lot, Micro-Lot, Nano-Lot?).

For example, if you buy one standard lot of EUR/USD for 1.1600 and sell it for 1.1700, your profit is 1.1700 – 1.1600 = 0.0100 or 100 pips.

The pip value of one standard lot of EUR/USD is $10. Therefore, your profit is 100 pips x $10 = $1,000 (see also What Is The Value Of A Pip?)

Selling in Forex is very easy. You don’t have to own or borrow the currency pair. You can just sell it and profit from the price decline. For example, if you sell one lot of EUR/USD for 1.1600 and the price drops to 1.1500, you will profit:

1.1600 – 1.1500 = 0.0100 * 100,000 = $1,000

July 1-3 Forex signals

July 3, 2015 at 6:42 am

On July 1 none of our signals got triggered. On July 3 we did not trade due to the Independence Day Holiday in the United States.

On July 2 the signals were as follows:

From: Dave Hughe <[email protected]>
Date: Thu, Jul 2, 2015 at 6:26 AM
Subject: July 2
To:
NZDCHF Sell 0.6319 SL 0.6341 P1= 0.6303 P2= 0.6383

This signal was not triggered with some brokers, with others it got caught in the NFP news release volatility.
From: Dave Hughe<[email protected]>
Date: Thu, Jul 2, 2015 at 8:46 AM
Subject: New order
To:

CHFJPY Sell 129.88 SL 130.21
Later the stop-loss was moved to 130.12 (see below):
From: Dave Hughe <[email protected]>
Date: Thu, Jul 2, 2015 at 8:51 AM
Subject: CHFJPY SL 130.12
The stop-loss was hit for the total loss of -72 pips.

June Forex Signals Results: +14% profit

July 1, 2015 at 5:45 pm

We made +14% profit in June.