Currency Trading - Do You Handle Investment Losses Well? By Ferris Malone At Isnare.com Ezine Articles

We all suffer losses, because our decisions can never all be perfect and we all have to make mistakes sometimes. So it is important to know how to appropriately and healthily handle investment losses.

We all end up being wrong sometimes – even breaking even is looked at as being wrong, because nobody wants to break-even. They want to make money. So when we lose money in an investment, we tend to feel very depressed and angry. There are several self-destructive indulgences that we might participate in to try to forget the pain and sense of failure.

What Should You Do?

If you are suddenly confronted with a heavy loss and or a seriously bad week or day, watch out how you react, for sometimes your natural reaction can be unhealthy and detrimental to you. Make sure you examine yourself and your actions to avoid excessive amounts of the following things, or some of the things to avoid in whole.

~ Food (particularly junk food – chips, sweets, sugar)

~ Alcohol and smoking (large amounts will not lift your spirits, only make you worse)

~ Entertainment (usually a good thing, but in excessive amounts it is unhealthy)

~ Sex (including pornography)

~ Laziness (maybe you don’t want to get out of bed in the morning)

~ Drugs (never a good way to lift your spirits. You’ll just go right back to being depressed)

These things that may not seem serious can ruin your career, your health, and your life when you use them to escape your trouble and depression. It is so natural to crave pleasure when we’re feeling down and in pain.

It is crucial to acknowledge and admit it if you are doing these things for this reason! And once you realize it, you have to stop doing it instantly. But it is impossible to do nothing, so what do you do?

Facing The Music

The best thing in the world, and what all professional Forex traders will advise you to do, is to face up to your loss and try to find what you did wrong. You have to examine your strategy and execution of your plan and what happened to make it go wrong.

By doing this, you can prepare yourself to act better the next time and avoid making the same mistake twice.

So where do you begin with the examination? Here’s a simple checklist that will make going over your system so much easier:

First of all, do you even have a system? You must have a system. Forex trading is not about luck and gut instinct decisions. In order to achieve success, you have to find a tried and true strategy that works for you and that you are willing to act with each time.

Second, did you test your strategy with “paper money” on a demo account before actually investing capital in it?

Third, did you invest all your capital, versus just a small bit?

Fourth, did you over-estimate your strategy? Be careful about optimism. Optimists are great people in life, but in Forex trading, they don’t get far. You have to be realistic.

Fifth, were you aware of your system’s limitations? You don’t want to use a system that won’t work for the present situation.

Sixth, does your system have the right code?

All these elements are important. When trading, you have to know your system and strategy thoroughly and realistically, and be certain in the result your decisions will lead to. Also, you have to be careful that you don’t risk too much money at one time. Be sparing with your capital.

So instead of beating yourself up emotionally and trying to escape the disappointment and pain of heavy losses, just make sure you system is solid and prepare yourself before each decision you make.

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