Cut Your Losses in Forex

As one learns to trade the Forex, it's very easy to fall prey to the emotional response to the market, but your emotions are your worst enemy when trading. As an example, when you enter a short position, and if the market went up - the wrong way, it's easy to simply think, "What goes up, must come down!" but with the market, what went up may not come down any time soon! You must know when to cut your losses!

Psychologically, we would prefer to think the Forex market will simply turn around quickly, but that's dangerous reasoning when trading. However, even if you have a large number of trades that start to go against you, if you learn to cut your losses quickly you can still be successful as a Forex trader. Sounds like an easy Forex lesson to learn, but it can actually be a tough one!

While trading the Forex, to implement proper money management, your number one rule should be to let your profits run, and cut your losses short. In the long run if your losses are less than your profits, you'll be successful at trading the Forex.

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