Loss or loss in trading is inevitable. If you may be experiencing loss, which is important for you to know is the percentage loss than your initial deposit balance or account drawdown

Loss or loss in trading is inevitable. If you may be experiencing loss, which is important for you to know is the percentage loss than your initial deposit balance or account drawdown. For example, if your initial deposit balance is $ 10,000 and you experience a loss until your balance is now $ 2.500, then the amount of drawdown or the percentage loss is 75% of your account.

Perhaps you do not experience the loss in a row, but the higher the drawdown on the final results of your trading, the greater the percentage of profit that you must achieve to close (recover) your losses. As an illustration, the following table is the percentage of profit that should be generated from the final balance to cover the loss percentage of the amount of the initial deposit.

 

As shown in the above table, for drawdown (% loss) which is greater, the percentage of the profit to be generated to cover the loss will increase exponentially. The greater the loss suffered would seem increasingly difficult to refund the initial deposit. Usually drawdown sizable losses that occur as a result of successive or too confident to double the size of the lot (position size) when opening a trading position.

Naturally when a trader experienced loss, of course he wants to immediately shut the loss. Often traders using methods outside the trading plan, even less so that changing the trading strategy. There are two ways that often do traders to cover the losses quickly:

                                

1. If the balance on the account is still possible, the trader will take greater risks by increasing the lot size (position size). Sometimes exceeds the percentage calculation of profit to cover losses, as traders would not only want limited to breakeven, but also want to profit more. For the novice trader trading experience is still minimal, it is done in a way that is irrational and tend to be emotional. By breaking a commitment on the magnitude of the risk per trade, means the trader is no longer trading, but gambling or gambling.
2. By adding a deposit on the trading account until its balance increases, or commonly known as 'inject'. Inject purpose in this case is that a trader can do 'revenge' in the way as in point 1, increases the size of the trading lot, perhaps even more daring in this way. How to think like a trader who is still common.
How to correct and rationalActual trading goal is to produce a consistent profit regardless of the lot size to trade, and not generating big profits in a short time. The magnitude of the risk and the size of the trading lot is part of money management that should be applied in trading.
Stay consistent in strategy and trading plan that you have examined (backtest and forward test) is the correct and rational way. Repeat the entire process right in your trading plan with patience and discipline. If you feel the need to inject funds, promoted by the minimum amount possible. Besides, try also to resist the temptation of a solution that is fast and instant.
The process of closing your loss will be equal to the incident. Profit consistent that you will produce will also make your trading account rises exponentially with time, discipline and patience.Source: www.forexjournal.com