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Forex trading is prevalent and more accessible than ever before. While many traders enjoy a few trades here and there, some people use it to make a living or as a secondary income. Many people who engage in Forex trading enjoy a balanced experience with wins followed by losses or vice versa.
The trouble is, it is not without risk. One minute you can be enjoying the highs of a run of successful trades while the next you are feeling the pinch of a few losses. It is when these losses start to become more frequent and more extensive in size that you need to know when to stop. This can be the tricky part for many as they try to recoup their losses.
So what do you do when it becomes a problem, and you find yourself with little control over your actions? How can you exercise restraint and recognise when you have a problem with trading? When you are in too deep, where do you go for help and advice? Finding the will to stop and resist the urge to carry on, for many, can be a problem.
In this guide, you will learn:
- How to spot the signs that you have a problem
- When to stop and how to exercise control
- Where to go for help when you can't stop
How Can I Stay in Control
The key to successful trading is knowing when to stop and when to cut your losses. Having a plan and an agreed set of parameters from the outset will also help you to exercise some control. Consider the following:
Choose Your Broker Carefully
Brokers offer different terms of trading, and you should always check this out before you start. If you want to trade with low volumes and minimum deposits, then choose a broker that caters for this and always make sure the broker is licensed.
Know Your Limits And Stick to Them
Never trade with more than you can afford to lose. If you have $500 to trade with and you can still afford all of your other monthly commitments after this then stick with this as your budget. Once it is gone, don't be tempted to dig deeper into your pockets for more. Ask yourself where the $500 has gone.
Set Yourself a Time Limit
If you find yourself trading far more than you would like, even if you are experiencing lots of success, it may be time to step away. It can be too tempting to focus on just one thing, and before you notice, everything around you is suffering. Set yourself strict limits each day.
What Signs Should I Look For
How do you know that you have a problem and what are the signs that you should be looking out for? For a start, look at how much money you are spending versus what you are winning. Are you spending a lot to win a little, are your losses outweighing your wins and do you find yourself spending more and more time trading? If you are spending too much time online, other things can start to suffer as you lose focus.
Perhaps your work will suffer the effects of your lack of focus, or maybe your family will start to notice that you seem to have other priorities. Once you start getting into the rut of losing and trying to win back your losses, your moods may become noticeably irritable, and you find that you are not sleeping or spending an increasing amount of time thinking about trading even when you are not trading.
How to Prevent Problem Trading
You may think that you have a strong will, good self-control and that these problems will never affect you. That is true of many people who end up with a problem when it comes to Forex. What starts as measured and controlled can often end up as a problem as you begin to suffer losses. To prevent problem trading, you need to be strict with yourself and to acknowledge that this is a pastime.
You should set yourself limits and not go beyond this. If you have a monthly budget, once it is spent you need to wait until a new month. Don't prioritise trading over things like a car service or a new car, for example. Don't fall into the habits of doubling up on the next trade if you have some successful trades under your belt or if you start to experience losses.
If you follow a strict set of rules and understand the signs that you need to look out for then, you should be able to enjoy Forex without falling into the trap of problem trading.
Where Can I Seek Help
Admitting you have a problem is the first step and being able to stop is the next. If you have the will to walk away, and the damage is not too significant, then you have learnt a valuable lesson. If you find that you can't stop and that you have a need to trade, and that other areas of your life are starting to suffer, it is time to seek help.
There are many sources of help available. If you feel you can, confide in a family member or friend. Sometimes a problem shared is a problem halved as they say and you may get some support and advice about what you should do. If you are embarrassed or concerned about talking to people you know then you can visit the following links:
It is possible to enjoy a successful Forex experience if you exercise self-control and follow a set of guidelines. It is essential, however to recognise the signs of problem trading and to know where to go to get help if you think it is becoming a problem.
Ben’s contributions as a freelancer to the site since 2013 are highly valued. He has a real talent particularly within short-term speculation, making many successful trades on the directions of the global financial markets.
