Forex Trading Malaysia: How to cope with investment losses and recover fast?

Categories: Forex Trading  

Tags: forex  forex trading  forex trading Malaysia  forex broker Malaysia & SEA  Trading Malaysia  

Publish date: 2023-1-13

Loss of investment! Making a loss on forex or stocks! There will always be gains and losses in investing. For ordinary investors, who feel horrible about losing money, investment losses and financial disaster might occasionally be intolerable.

What if the stock market crashes? Many people are worried about this possibility, and there is good reason to be. If the stock market falls significantly, it could lead to a lot of financial hardship for many people. This could especially be true for those who have invested in the stock market through their retirement savings. Numerous seasoned investors have encountered failure in the past, but they were able to bounce back and do well. I'm confident you can do the same after having read this piece.

Experience financial loss

Let's start with a look at some of the most common investing myths.

  • Not having a trading or investing plan -- not having a stop loss, etc. -- are common and deadly mistakes.
  • Trading on gut instinct - Trading or investing on your gut is gambling.
  • Focus only on performance - Past performance is never an indicator of future results, and many people have lost money investing in stocks and cryptocurrency trading because of performance alone.
  • Too much leverage - Leveraged trading amplifies risk exposure and is not for every investor. Water can carry a boat or tip it over.

If you are a novice investor, you should seek out more practical investing expertise in order to avoid the aforementioned investment fallacies.

Recommendation: Visit FXCM Market insights to learn more about the following subjects:

The psychological impact of financial loss

It's perfectly normal to feel depressed and sad after a financial loss. Don't be ashamed, don't run away, and especially don't struggle. Investment failure should be dealt with by standing up and adjusting the investment mentality.

How to deal with financial loss and recover emotionally?

After suffering a financial loss, you need to adjust your investment attitude as soon as possible. There are several ways to cheer yourself up:

Take a break. For many people, the first thing that comes to mind is finding new opportunities and recovering losses. However, take a step back. At this time, you need to adjust your focus, when you feel that you have come out of the shadow of failure, then you are qualified to return to the track and start trading again.

Don't dwell on the past. While the loss is frustrating, it is the psychological cost that needs to be recovered. Don't have a hard time with yourself, addicted to your own emotions. Learn to accept your losses in peace. Complaining won't help.

Remember that some investments does, in fact, turn out badly. Anyone can become a victim since the sector is full of unskilled, unscrupulous, and dishonest individuals.

Sound Coping Strategies

Make a recovery plan. Do your homework to find the right strategy, portfolio, and risk calculation and management.

Find inspiration.Stones from other hills may serve to polish the jade of this one”. Look for situations like yours and see how successful investors approach financial planning. But be careful not only to see the success of others blossoming, but also to learn from their cautious and thoughtful behavior and way of thinking.

Focus on yourself. Try to diversify your life outside of financial investing, and don't let failure frustrate you or even give up other hobbies. It will be easier to get back on the field if you can regain control of yourself.

Start by picking yourself up and rebuilding your portfolio. To ensure a balanced portfolio and prevent severe losses, diversifying your portfolio should always be the first step in the investment process.  Select a trading platform that offers you the tools and analysis you need to make informed decisions.

As the old saying goes, diseases come on horseback, but go away on foot. Financial recovery may take a long time. This is actually a good thing. Taking a long-term view will give you a broader perspective and give you the opportunity to adjust your strategy and move more steadily.

Keep your head clear: As mentioned above, the first step to recovery is to get rid of emotional burdens. Financial recovery and success depend on being calm and calculated, for example, learning how to set a stop loss. If you're feeling "stuck," it's because of your emotional reaction, and the first thing you need to do is regain calm.

Pace yourself: Remember, don't expect to make up all your losses at once. Investment losses and financial recovery take time to process, and you may need a lot of trading. Tell yourself to take a breath and study the market opportunity carefully.

Be disciplined: Once you find the right strategy, stick to it. You can tweak things along the way, but be sure to stay true to your strategy and recovery plan. As long as you have a strategy that allows for setbacks and small losses, don't be afraid to pull back.

Learn From Your Mistakes

You can prevent making bad financial judgements in the future by attempting to understand why you made a particular option.

What if the investment fails? A fall into the pit and a gain in your wisdom is very important. Remembering what led to your failure and avoiding it again is another part of adjusting your investment mindset.

A solid foundation in financial literacy can assist a variety of life objectives, including investing, managing debt wisely, starting a business, and saving for retirement or school. Knowing how to make a budget, prepare for retirement, manage debt, and keep track of personal spending are all important components of financial literacy.

For a While, Cut Back on Your Spending.

This deficit can be closed in two ways: by increasing cash input and reducing cash outflow. Keep track of your spending and look for cheap but efficient ways to cut back. This could involve eating out or even less significant expenses like cable TV.

Recognize that it is a temporary fix, and that you can continue incorporating your preferred spending patterns into your daily life once your financial situation has stabilised.

Increase Your Revenue Sources

You now have some understanding of the efforts or financial inputs required to fill the gap created by your financial loss because you have a rebuilding strategy or vision in place. Finding other sources of income is one approach to supplement your present income.

The internet has made it so that many people can make money while they are at home. This is great news, especially for those who would rather stay in their own homes than go out and work. There are many ways to make money through the internet, and the options are only going to continue to grow in scope as time goes on.

Seek Professional Help

Last but not least, it can be worthwhile to enlist the assistance of a reputable independent financial advisor if you want to invest your money wisely in the future.

While we may believe that dealing with financial losses requires only logic and the use of the head, there are occasions when both the intellect and the heart need support. Today, unlike a few years ago, getting professional treatment is no longer frowned upon, in large part because of the COVID-19 pandemic. A therapist can help you process your thoughts in a healthy way, by helping you to organize and think through your ideas. This can help you feel better equipped to cope with whatever situation is causing you distress.

If you're feeling particularly down, it might be helpful to talk to someone outside of your usual circles. A friend or family member who you feel safe and comfortable around can provide some much-needed support.

Strategies and Action Plan in Brief

The following strategies can help you cope with investment losses:

  1. Accept the reality of loss and move on.
  2. Learn from mistakes and develop a better strategy.
  3. Avoid overtrading and use sound risk management practices.
  4. Take a break when needed, step back and reflect on the previous trades.
  5. Don't take it personally – it's just money!
  6. Focus on the present and don’t dwell in the past.
  7. Take time to celebrate your successes and forgive yourself for the failures.
  8. Set realistic goals and objectives for each trade.
  9. Improve your financial literacy and stay informed about the markets.
  10. Talk to a financial advisor or mentor about your experiences.

The Bottom Line

The worst thing you can do after suffering a financial loss is to give up. Losses will increase as a result of this. Instead of giving up, concentrate on recouping your losses as quickly as you can.

Sound coping strategies or financial recovery plans can help you move on faster and may even help you recoup financial losses. By choosing the right strategy, you can reduce the emotional pain that accompanies grieving, improve your sense of well-being, and feel more in control. Achieving your age in good health alone is a success.

Investing always comes with risk, and it's important to have the right investment mindset. Hopefully, you will understand how to deal with losses correctly through the common misconceptions of investment mentality described in this article.