Losing a trade in the market is a common thing, and it has indeed happened to most traders. One can learn from experience and trade more efficiently so as not to repeat it. This Blog will be about Recovering from a big trading loss.
Once you’ve decided to trade fx options online, yo have to prepare yourself for the possibility of losses. However, if you have lost a trade that seems like a big deal, you could do things to recover from such a significant loss.
Low-risk high reward setups
One thing that you can do is to trade low-risk, high reward setups. The likelihood of losing trade in this setup is much lower than when you are unsure what to trade or trade too big for your account size. You will consider this a good way of trading because it reduces the risk significantly and increases your chances of winning trade. If you trade too big for your account size, it might result in a significant loss, making trading even more complicated since you are still recovering from the previous failure.
Trade with lower leverage
Another thing that one can do is trade with lower leverage to reduce the margin required for this trade. It is essential because it will prevent a further margin call if the trade turns out to be a loss. If you trade with lower leverage, the trade size required might even decrease to trade safely without having too much risk in losing trade.
Increase your stop loss
If your trade continues to be a loss, one can increase his stop loss to a break-even point or critical support and resistance level. It does not necessarily mean that you should trade with a stop loss of 20 pips after losing trade because it could also result in additional trade due to greediness. All traders require some trade management to avoid the mistake mentioned above from happening again, including being over-aggressive. It will be the best way to trade because you are now limiting your trade size and taking the trade at critical support or resistance level, reducing the risk of losing.
Trade less volatile markets
Another thing that one can do is trade in less volatile market conditions where there is no sign of price breakout, allowing for more profitable trade and even preventing them from turning into a loss. You might consider this the best way of trading because you are reducing trade size and trade in less volatile market conditions, which reduces the risk involved for you not to lose the trade.
Lower your leverage even more
Another thing that one can do is trade with even lower leverage, which would result in smaller trade sizes, not to increase the margin you use. This trade size will lead to a lousy trade being smaller because you are taking the trade at key support or resistance levels and opening trade with a small stop loss.
If your trade continues to be a loss, another thing that one could consider using is even lower leverage such as 10:1 or 5:1, which will reduce trade size and even help keep your trade from turning into a loss. Trading with low leverage also brings about the concept of trade management, where you can set off some losing trade for the sake of preventing further loss.
Higher trade frequencies
If there is no sign of trade improvement and you continue to lose the trade, one can trade with higher trade frequency, which might increase trade size. This trade size would be good because you are taking trade frequently, and more often than not, it reduces the likelihood of losing trade. However, if it continues to be a loss, there is nothing else left other than just waiting for better conditions for trade.
If all else fails, there are no other options left but waiting for better conditions before risking any more capital on trades again.