I’m losing money, what should I do, Part 1

A new set of tips for you based on when your trading isn’t going so well.

Tip 61. Stop.

62. Looking again at Spread Betting Tip 61 above you may say that’s not a tip. Well you’d be surprised how many people get it wrong. People carry on trading through stubbornness, chasing profits, habit etc.

This brings me to Tip 62. Stop. Paper Trade instead. There are plenty of free demo accounts out there that you can use. Eg see Financial Spreads, Capital Spreads, GFT etc

Try trading for free with a Demo account. You shouldn’t get poorer, you’ll learn more and it’ll give you a break from the financial stress of the markets.

63. Don’t ‘chase your losses’. It can be tempting to increase your stake size on your next trades to cover losses from a previous trade. It can be tempting to quickly open more poorly researched positions in order recover losses.

This will get you into more trouble. It will put more pressure on you and you’ll start losing more money at a rate you never thought possible. Nick Leeson is a good example of someone playing the markets and chasing their (the bank’s) losses.

64. Catching a Falling Knife, Chasing Falling Markets, Averaging Down. I’ve never really understood why traders do this. Why would you increase your position in a market that’s already going against you? You are often best off just accepting the loss. Predicting the bottom of the curve is tricky. You are probably getting yourself into more trouble

65. It can also be tempting to re-enter a trade after it hits your Stop Loss. This is a variation on Spread Betting Tip 64. You’ve already lost once on the trade, be careful. Going back into a market that you’ve already called wrong once may not be your best idea. Research the trade just like you would on any new bet and then only re-enter the market if it looks like a good bet. Make sure you don’t repeat the same mistake on the same market. Do query why you are re-entering a market you’ve already lost on. A losing trade generally means that you’re wrong

66. New Lucky Markets. An old favourite - New Lucky Markets. Sometimes you feel like moving to new markets because the markets you’re currently trading on are losing you money or even ‘unlucky’. That’s like moving from the blackjack table to the roulette table. Fine for recreational fun, it’s not so good for investing. Stick to the markets you know best.

Good Luck

DB

Clean Financial - Spread Betting