Holding losses on Forex is a relevant topic not just for beginners but also for experienced traders. One caveat: this article does not apply to long-term investors with substantial capital, as they typically manage risks competently and bet on the long term. Losses on their positions are part of their trading style. We focus on regular traders.
Habit of Trading Incorrectly
Holding losses on Forex means a trading situation where the trader does not close a position that is in loss, keeping it in hopes that it will eventually become profitable. There’s nothing particularly unusual about this—everyone does it sometimes. However, this trading habit carries numerous dangers.
The main danger is reinforcing an incorrect trading strategy, where upon opening a trade, the trader does not know what loss they might incur or where they will close the trade at a loss. Suppose a trader has encountered such a situation before, managed to hold through the loss, and closed the trade in profit. Deep in the subconscious, this moment is remembered, and every time a similar situation arises, they do the same. If this approach becomes ingrained, it will eventually lead to high risk…
What Is the Danger?
The risk is that due to this approach, sooner or later they will lose all their money. It’s just a matter of time.
Let’s consider an example: a trader opens a position but misjudges the direction and starts incurring a loss. They do not close the position and wait. The trader remembers that simply holding through losses helped them before. The trader waits. The loss increases day by day, growing larger and larger. The trader keeps dreaming that a price reversal in the right direction is just around the corner.
However, the reversal does not come, and it does not. With this approach, more than half the deposit may already be in loss, if not more. This moment is key. The trader will no longer close the position, having already lost a large part of the deposit, so in 98% of cases, such “lucky ones” continue waiting. The outcome is clear: the trader waited until there was no money left in the account. That’s what holding losses leads to!
Losses Are the Costs of the Profession
It’s worth noting that holding through losses might save you once, twice, or even ten times, but incorrect trading, once established, will persist and make itself known when it’s already too late for you and your money. Therefore, always think carefully about what you do, especially on Forex.
Don’t you remember the golden rule? When a trader opens a trade, they know what loss they might take and approximately what profit they can expect. It’s impossible to always make only profitable trades. Losses are the costs of trading on financial markets, and they will happen whether you like it or not. Moreover, they can be controlled, which will determine the success of your entire trading.
