It is simply not possible for any trader - whether amateur, professional or anywhere in between - to avoid every single loss. The disciplined trader is fully cognizant of the inevitability of losing hard-earned profits, and able to accept losses without emotional upheaval. At the same time, however, there are systematic methods by which you can ensure that losses are kept to a minimum.

Develop a Loss-Limit system

Every trader should employ a loss-limit system whereby he or she limits losses to a fixed percentage of assets, or a fixed percentage loss from capital employed in a single trade. Think of such a system as a circuit breaker on the trade. After a certain percentage has been lost from his or her trading account or principal traded, the trader may very well stop trading entirely or may immediately exit the losing position. With this system, exiting a losing position is an unemotional decision that is not affected by any hopes that "the market is sure to turn around any minute now."

No one can accurately predict the markets

For those who already have trading experience, you have probably figured out that nobody can accurately predict what the markets will do. This is simply because nobody controls the markets. The most important lesson active traders learn during their journey towards profitability is this - even though traders have no control over the markets, traders do have control over their money.

Develop an effective Money Management Strategy

To be successful at trading financial markets, it is absolutely imperative active traders develop an effective money management strategy that gives them an edge in the marketplace. Money management technique is the single most important variable that can make, or break, a trading career.

Cut your losses in time

Pull the string and cut your losses to the absolute minimum when you know you’re wrong. If you haven’t quite figured out how to identify when you’re wrong, it’s when your trade moves against you and your losses reach the maximum amount of money you are willing to lose on a trade.

Best trading opportunities are identified by using Fundamental and Technical analyses

If you are a new active trader, it is important for you to understand that the best trading opportunities are found using both fundamental and technical analysis. Fundamental analysis helps a trader find optimal long opportunities within the strongest markets and optimal shorting opportunities within the weakest markets. Technical analysis is the tool traders use to optimize the open and close of their trading positions.

Technology to your rescue

Fortunately, with the advancement in technology you don’t have to be an expert at reading corporate financial statements to do fundamental analysis. There are products and services offered by companies that allow you access to fundamental analysis data via simple web reports over the internet. At IDBI Capital, we provide free Fundamental and Technical reports to our clients. To access our Fundamental and Technical reports, click here .