Extreme loss aversion
The aversion to loss is human nature, a part of human nature, and a risk aversion measure left by our ancestors in the harsh living environment. No matter who it is, there is a natural aversion to loss and risk.
But in foreign exchange trading, “stop loss” is an unavoidable topic for experts and novices. It can be said that “stop loss” is the key to stable profitability and will always accompany the growth of traders.
Why are people who hate loss not suitable for foreign exchange trading? How to stop loss reasonably? Please see below.
People who hate losses tend to be obsessed with winning rates, especially newcomers in the foreign exchange market. Those who are obsessed with winning rates often fail. Because he is extremely averse to losses, he often moves the stop loss line down to expand the loss. This sentence seems like a paradox. In fact, most traders repeat the same wrong things when they encounter losses. It can be said that large losses and small profits are the essential reason for the large retracement of the account.
Solution “stop loss” as the “funding” leading to the long-term profit of foreign exchange
Blocking blogs that cannot be managed
People who like high-risk transactions will not manage funds in their accounts, let alone trading plans. The reason why they don’t manage funds is because they treat the financial market as a blockade, and they treat buying up and buying down as buying big and buying small.
How much leverage is appropriate? What is the maximum drawdown that can be accepted? How many lots is controlled in each transaction?
If you treat transactions as blocking blogs, you don’t need to consider these issues at all. After all, considering these issues is very tiring, and blocking blogs is very stimulating. Human nature tends to pursue pleasure rather than rational analysis.
Solution limit the number of open positions and strictly observe
There is no trading strategy, simply speaking
Many people have very rich trading experience. They have been traders for two, three, or even ten years and have not yet achieved stable profits. Through conversations with them, we have learned that these people often do not have their own trading styles, let alone specific trading strategies. Many trading strategies are only conceptual. Understand, there is no specific application in actual operation.I wonder if you who are reading this article are the same?
Solution enter the market after learning basic theoretical knowledge
Find the problem, immediately proceed to correct the problem, follow the behavior pattern of successful traders. The common ground of successful traders is to do the right thing, manage funds, and revise their trading system through continuous learning. Treat loss as the “funding” for the road to success, and treat stop loss reasonably. Determine the maximum risk you can bear in a transaction, formulate a transaction plan and strictly follow it.
Learn the wisdom of predecessors and develop your own trading strategies by analogy. These points can be said to be a shortcut to a successful trader. I wonder if you can do it?
There is a saying that I want to give to investment friends. When making an investment, the first thing you need to do is to wait for a good opportunity to enter the market. In today’s investment market, you must not use your own beautiful imagination to guess what the market can give How much you return, you will be miserably educated by the market, and even lose your money. Therefore, if you really want to make money by investing, please don’t keep complaining about how much you have lost. The market is a trap. Introspect what is causing you to keep losing money. Finding and solving the problem is the key. In order to be responsible for your own funds, please take every time you enter the market seriously. The water flows long and the aftertaste is endless. Keep your heart, forever.