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Good Money After Bad

Don't Chase Losses

Don’t chase losses, it is poor risk management and reeks of gambling. Losses can compound quickly wiping out your balance sheet. If you make a loss accept it and analyse what caused the loss and learn from it for next time. If you did your risk analysis properly then your losses should be small and within expectation.

Invest Small Sums Rather Than Betting The Lot

Limiting the investment amount in the first place lessens the chance of wiping yourself out. The generally accepted rule for trading is 2-3% of your investment pool on any one trade. If you lose 2% of your money it hurts a lot less than 75%. Betting big is gambling. Enter many different trades at the same time. 10 trades of 2% is 20% of your money, but if 2 go bad (some always do) then 8 are going to return a profit. If more than 50% of your trades are earning money then you are moving forward. With a risk profile on each trade you will have limited your losses so the profits should be more than the losses.

Further Reading

Chasing Losses (ExpertGlossary)