When you look at trading on the forex Australia market you need to know what you should not be doing when you make a loss. There are certain things that will only compound the losses that you have already made. It is important that you know what you should not be doing and why you should be avoiding this. You also have to consider what you should be doing when you make losses on the forex Australia market.
Adding To Your Forex Australia Losses
The first thing that you should avoid on the forex Australia market is adding to your losses. When you add to your loss you are going to increase the amount that you have in your losing trade. Most traders will think that this is something they will never do. However, there are a lot of traders who do this believing that they are using the averaging down system.
This system will have you increase the amount of the trade so that when the trade turns you make back the losses. There are two major problems with the use of this system. The first is that you have no way of knowing when the trade will turn. This means that you could be adding more money until you face a margin call. The second problem is that the price action will need to turn with double the strength for you to make all of your money back. This is unlikely and you will only be making your losses greater when you do this.
Turning to Revenge Trading
A type of emotional trading that a lot of traders turn to when they make a loss is revenge trading. This trading is fuelled by your desire to get your money back at any cost. As this is a very emotional reason to trade you will not be very rational when you complete the trading. This will lead to large amounts of risks being used and limited amount go analysis being completed. When you fall into revenge trading you will not take the time to calmly analyse the market. If you did you would see that revenge trading is not the route you should be taking.
Most traders who fall into revenge trading are going to lose more on the market then they gain. The primary issue with revenge trading is that, like all emotional trading, you will sometimes make a profit. This means that the next time you make a loss on the market you are going to fall into this again because you got the money back the last time. However, in the long run you are going to lose more with revenge trading then you gain.
There are some traders who make a loss on the forex market, become spooked and end their trading career. This is the worst thing that you could possibly do. All traders are going to make a loss on the market at some point. You have to accept this as something inevitable and work at limiting the impact of your losses.