How to Control Online Trading Investment Losses

One might wonder why a profit/loss account is necessary when investing is about extreme highs and extreme lows the simple answer to this is that investors are only human beings. When taking a loss, investors too get disappointed and demoralized; to be a disciplined and courageous investor, one must adopt a strategy like the profit/loss account.

What is the Profit/loss Account?

A profit/loss account is a plan that sets a limit of loss or gains that a retail investor will take on a stock; it’s a sensitive strategy as containing losses is an important part of forex trading. A profit/loss account enables a trader to recognize what they do wrong in failed trades that result in losses and helps them avoid making the same mistakes twice.

Working Out Your Plan

Working out or deciding on a plan may sound like an easy task, but really it’s the hardest part about the whole profit/loss account strategy.

To start, you need to decide on the maximums and minimums that can’t be the same for each stock that you hold. To effectively devise a plan, you must use your analytic skills as a trader to understand that each stock needs individual attention and the trader needs to learn how much the capacity of each stock to move in either direction is, to do this most investors use fundamental analysis while some use technical analysis or even a combination of both these techniques to determine the right limits for gains and losses.

Something that also needs to be taken into consideration when a trader is deciding on what profit/loss account is to be formed is your patience and ability to withstand risks amongst other factors like your time frame and characteristics of the trader.

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How to Set Goals That are not out of Your Reach as a Forex Trader

We’ve all been told that we should set goals, and we assume that we can set realistic goals- but most of us have never been taught how to go about setting goals effectively so that they are realistic and achievable. I think a large part of why 25% of New Year resolutions are broken in the first week is due to the fact that they aren’t realistic goals, without something to shoot towards; it’s quite easy to get discouraged and give up quickly.

Don’t Aim Too High

To begin with, one must refrain from setting goals too high, out of the realm of goals which are realistically achievable in a specific amount of time, you cannot expect to trade successfully without learning the tricks of the trade first, recognize the value of proper preparation. This can be done by aligning your personal goals and disposition with the instruments and markets you can comfortably relate to. Break down long term goals into shorter, more achievable goals, you will end up more focused as well as better motivated than before.

Don’t Make Trading Your Profession Earlier on

Don’t aim to make a living right away, if you’re fresh out of school or still studying don’t only rely on trading to get you by, you will need a proper job to begin, so in the unfortunate event that you do go into loss, you can still manage to feed yourself and clothe yourself. The key is to understand that there is no such thing as only profitable trades and that no system will trigger a 100% sure thing and that losses are to be taken quickly and often, if necessary.

Don’t be in the Market 24/7

Another realistically important goal to possess is to stay out of the market as much as possible and to only trade those trade setups that look promising and that might yield high probability results. The best way of doing this is to think of forex trading as a marathon rather than a jog where you have to trade sensibly and with caution and you will find it is possible to seriously grow your capital from trading the forex markets, just not If you’re a trading addict who needs to get his fix every day.

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Countdown To The EU Referendum: Can The British Government Avoid Brexit?

The countdown begins. Within a month, precisely June 23rd, the British will vote to determine its future within the European Union. This is coming in the midst of doubts of what the outcome of the referendum will be. The uncertainty is already being seen in markets across the globe. It needs to be determined how we all got here, the keys are now offered on a historical query that can trigger a process hitherto unexplored. No nation has ever left the EU block. How then will the block manage if the eventual outcome of the Brexit referendum turns out to be unfavourable to the block?

Who Can Vote in the Referendum?

All British citizens that are 18 years and above, Irish and Commonwealth citizens living in the UK , along with British citizens residing abroad  who have been on the electoral register in the last 15 years. European residents in the UK may not vote.

Can Spain Claim Gibraltar?

Although Gibraltarians are not lovers of the community project, but they are ready to defend themselves so long as it gives them a solution to the difficult relationship they have with Madrid. For this reason, all political parties of the Rock are campaigning within the EU block. According to the treaty of accession of the United Kingdom to the EEC in 1973, the Rock came as a "European territory for whose external relations the UK government is responsible for."

The Spanish has emphasized on several occasions that London does not want to leave the block. Although, according to British newspapers, if that scenario occurs, Madrid could take advantage of it to return to claim sovereignty over the Rock 

What is the Official Position of the British Government?

Given the popularity in recent years, the Eurosceptic UKIP were the ranks 'Tories' which pushed David Cameron to convene the referendum. The 'premier' is campaigning for permanence. But to avoid internal revolt, he was forced to give freedom to his people to defend the position that most convince them. Half of the Conservative MPs, including five ministers, are campaigning for the exit. The most significant case is Boris Johnson. The former mayor of London had always defended the European project, but now advocates leaving the club. According to analysts, more than conviction, by a sheer strategy to prepare his way to party leadership.

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Is it Possible to Make Currency Trading Your Career?

It all really seems easy enough doesn’t it? Especially if you consider the fact that it’s not every day that you run into someone who’s a successful forex trader, you automatically conclude that there mustn’t be very many people in this field and if there aren’t many people in this field, it would be easy to rise to the top with the proper knowledge and training, correct? Well, I hate to rain all over you parade but the fact of the matter is that despite the fact that not many people make trading currencies their profession, the ones that do, are so powerful- we’re talking Soros- billionaires kind of powerful that you can’t hope to bring down or accompany on the top. So whatever leverage you think you might have over everyone else just because you thought of this brand new way of earning- forget about it because you and your five hundred dollar bank account are not running into any quick money any time soon.

The forex market is fluid which means that it’s constantly changing- experiencing fluctuations and such. It’s fast and unpredictable and sure, this may mean that you can make money fast, but what it also means is that you can lose money just as fast- if not quicker. Because they’re ever changing, it’s hard to predict much in the forex market regarding currencies and government laws unless you’re one of those big shots with insider connections.

With the rise of scammers and manipulation it’s quite easy to fall for the whole get rich quick ordeals and schemes, instead of wondering whether or not you should take the opportunity and run, you need to ask yourself (and the person offering the opportunity to you) why you’ve been given this opportunity and why you of all people. If the answers you give yourself or get from them do not seem legitimate enough, take that as your clue to opt out of the whole ordeal right then and there.

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How to Expertly Sell a Losing Position

Let’s say you’re a stockholder who wants to sell your stock for whatever reasons - usually the reason is that your stock is losing its value- but can’t fathom selling your stock at a time when losses might be larger. There are certain rules and regulations that if followed by traders can lead to great profits rather than selling at a loss.

Having a Compliant Selling Strategy
When choosing a suitable selling strategy, the nature of the company needs to be taken into consideration, there are many different types of investors with many different objectives and not all those objectives can be achieved all together- compromise must always be made. General strategies cannot always be used like the pricing strategy when other strategies such as the stop-loss strategy can be employed, however the stop-loss strategy has the tendency to become less and less useful as the investment time frame extends itself.

The 3 Fundamental Questions
To learn more about yourself as a trader and your investing style, you need first answer the three fundamental questions the first being why you bought the stock in the first place, what changed since then and whether or not that change alters your reasons for investing in the company. If your stock has gone down in price there is probably a reason why, you need to pinpoint that reason and understand how that affects the way in which you trade and why you trade with a specific company.

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Prospect/Loss-Aversion Theory

Prospect theory is a behavioral theory in economics which describes the way in which people tend to choose between probabilistic alternatives that involve risk and cases where the probabilities of outcomes are known. According to this theory, people- in this case forex traders make decisions based on the latent value of losses and gains rather than the ultimate outcome foreseen.  Practically speaking, it seems all too justified to expect a forex trader to prefer a sure investment rather than an unsure one, however what Prospect theory suggests is that traders reserve specific quantifiable emotions over losses and gains separately for each one.

Loss Aversion
Loss aversion refers to people's inclination to avoiding losses rather than acquiring gains, psychologically speaking, a lot of studies show that losses are more powerful than gains however due to human psyche and greed, when traders evaluate an outcome comprising parallel gains and losses, they prefer avoiding losses rather than making gains.

The Endowment Effect
Accordingly, originally, loss aversion was proposed as a justification of the endowment effect, which is the fact that people place a higher value on a good that they own than on an identical good that they do not own, as is the human psyche. Loss aversion and the endowment effect go against the Coase theorem which states that "the allocation of resources will be independent of the assignment of property rights when costless trades are possible.”
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The Trader’s Cure – Stop Overanalysing

Every trader, at least once in his career has come across a trade setup that looks perfect at first but then when they start to analyse it, they begin to feel less and less sure about that trade. Unquestionably, it is good to study and analyse every trade setup before entering it but overdoing this process and overthinking about it can become a problem for you.

This is quite common in the trading world, traders often over-analyse themselves right out of a good trade setup and it can become a huge problem that can have several negative consequences on their trading performance.

The solution for this problem is simple, ignore these influences. You should focus more on mastering your strategy, sticking to your plan and accept the fact that those external influences only hurt your actions.

The next problem is psyching yourself out of a good trade. One of the worst feelings a trader can have is when he/she watches the very trade they left, take off in their favour. The sole reason of them not entering it was that they thought ‘too’ much about it. All the traders have been in this scenario once in their careers and the cure for this problem is again, simple, don’t think so hard about it.
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