The hardest part of trading forex is coping with financial losses. It is not simply a matter of pain and distress, but it is also a fact that losses are usually the catalyst that pushes traders into making their worst mistakes, which can then cause even greater losses, producing a vicious spiral in which the trader’s account spins out of control. No matter how long you’ve been trading on foreign exchange (forex) markets, you are bound to experience lapses in trading discipline, whether they are brought on by unusual market developments or emotional extremes.

You cannot avoid losses at all in trading. Losses are part of the forex trading game. They are something you will have to get comfortable with, and not identify with, or value yourself based on the latest win or loss. Trading is really about getting comfortable with yourself and getting comfortable with losses. They are going to happen just like the sun will rise and set. Trying to avoid that which is unavoidable will create a limiting belief in your head that only interferes with your trading. Understand that in reality, losses get you closer to your next win as you let the edge play out.

The most common trading mistake is holding on to losing positions for too long and taking profit on winning trades too soon. The key to limiting losses is to follow a risk-aware trading plan that always has a stop-loss order and to stick to it. No one is right all the time, so the sooner you’re able to accept small losses as part of everyday trading, the sooner you’ll be able to refocus on spotting and trading winning strategies.

It is common for forex marketers to encourage you to trade large lot sizes and trade using high leverage to generate large returns on a small amount of initial capital. You must have some money to make some money, and it is possible for you to generate outstanding returns on limited capital in the short term. However, with only a small amount of capital and outsized risk because of too-high leverage, you will find yourself being emotional with each swing of the market's ups and downs and jumping in and out and the worst times possible.

If anything, you should avoid the mistake of thinking you can avoid losses, by only waiting for these magical A+ setups. There is really nothing to avoid in trading, which is more about getting comfortable with uncertainty, and understanding losses are part of the game. When you start to do this, you will find yourself taking trades less personally, and executing with greater discipline, lesser emotions, and a clearer perspective on what it is to trade professionally.