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The FX Bootcamp Guide to Strategic and Tactical Forex Trading by Wayne McDonell

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LIMITS FOR LOSS

Get used to losing in forex. It’s a normal part of trading. In fact, you should take pride in your losses. Do not fear them. Respect them.
When you recognize a losing trade, get out!
• Do not wait for price to come back.
• Do not ride out the storm.
• Do not double down.
• Do not be the tough guy.
• Be the wimp and cash out.
• The sooner the better.

Take Pride in Your Losses

Some of my best trading decisions were to get out of losing trades moments before the trade would have turned really ugly. A negative 28-pip trade could have been a negative 48-pip trade if I hadn’t had a trade plan.
Emotional duress and mental certainty would have doomed me. When a plan has failed, it’s best to abort the trade. The great thing about forex is that there are endless amounts of trades. If you are on the wrong side of a move, preserve your capital by cutting your losses and get in on the next trade.
The more emotional baggage you place on your losing trades, the worse they’ll get. New traders are often ashamed of losing trades. Be ashamed of stupid trades not losing trades. You can develop your knowledge of the forex market and improve your trading skills so your stupid trades will fade into rarity. However, small losses are normal.
Remove the pride and fear from your trading. Get out when your charts tell you something has changed. Then create a new trade plan. Don’t exit your trade because of emotion. Exit the trade because the charts told you to or your limit for ...

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