Warning Against Chasing Forex Losses

Online, July 1, 2013 (Newswire.com) - Online forex trading advice site IndependentInvestor.co.uk has warned traders to avoid chasing losses in forex by trading more aggressively, citing concerns over emotional trading and the potential for serious capital damage as major reasons to trade objectively.

Emotional trading in the immediate aftermath of a market loss can lead to irrational decision making and excessive risk-taking (read more about over-leveraging), and can jeopardise the capital reserves vital to ensuring ongoing success if careless positions turn against the markets.

With leverage factoring in to amplify the size and weight of each transaction, chasing losses can result in heavier than anticipated defeats, and can set traders into a spiral of capital damage that's hard to break, according to IndependentInvestor.co.uk.

A spokesperson for IndependentInvestor.co.uk said that while there might be a temptation to chase losses in the aftermath of defeat, increasing the levels of risk during a key risk period for emotional, rash decision making was likely to yield substantial losses, and had the potential to become a significant setback against an otherwise successful portfolio.

"Whenever you sustain a loss in forex, the weight of leverage and the volatility of the markets can mean the results are deeper and more damaging than a similar loss in cash markets. Such is the nature of the beast, leverage brings the potential for high winnings and significant capital losses, and it's important as a trader to remain as neutral to the emotional effects of the trading rollercoaster as possible. In this sense, chasing losses with bigger, more aggressive trades is a negative behaviour, and one with the potential to cause lasting damage to any trading account."

"At IndependentInvestor.co.uk, we advise traders to treat forex with caution, and only to get involved in positions that can be rationally, objectively justified. Without this form of justification or reason, it's likely that you're trading on emotional triggers, which is where many problems begin. By cutting out the emotion and building up the objective side of your trading mentality you can create a stronger position for yourself and your trading going forward."

IndependentInvestor.co.uk provides a range of materials and resources for forex traders looking to improve their fortunes in the global currency markets, with information and advice on how best to capitalise on market movements.

About:
IndependentInvestor.co.uk is an online forex information site, specialising in providing traders with the information and knowledge they need to succeed in forex markets. Compiled and maintained by experienced traders, the resources at IndependentInvestor.co.uk range from foundational to advanced and cover the full spectrum of forex trading knowledge and expertise.

As well as resources and trading materials, IndependentInvestor.co.uk is also home to the web's most comprehensive broker comparison site, providing an opportunity for direct comparisons between the market's leading forex brokers and helping traders worldwide find the cheapest terms for their trading.