One of the biggest problems beginner Forex traders face is not their ability to accurately anticipate the movements of the market, but it’s the fact that most traders will go through a cycle made up of: A series of winning trades that boost their confidence, followed by an inevitable big loss that cancels out any profits made, and then some.
Stop Losing Forex Trades With These 5 Tips
So what’s the secret? How do you stop the mental errors that inevitably lead you to ask yourself in frustration “How do I stop losing Forex trades?”
Hopefully this article answers that exact question in five easy to follow steps tailored to help you prevent Forex losing streaks. These steps will help you establish a foundation on which you can prepare today for the trading problems you face tomorrow.
If you want to start winning more Forex and binary options trades and stop losing money, then you need to be prepared to put in the ground work today, tomorrow, and months to years in the future.
Here are five ways to stop losing Forex trades today.
1. If you’re prone to losing streaks, switch to demo right away
If you are losing a Forex trade using your real, hard earned money, then it will only add to the psychological damage that comes with losing a trade, let alone a trade using your own money. Continue to lose trades with real money and you’ll damage your pride and ego.
If you’re in a losing streak, you need to minimize as much risk as you can. This means to start using a demo trading account more often. Regrouping from real trading and using a demo will give you time to collect your thoughts and analysis, get rid of the pressure of being right every time and give you time to approach the market with fresh outlook.
Trading a demo account over real money has several advantages. A demo account makes you realize that in order to be truly profitable with Forex in the long term, that you must make consistently profitable trades with optimal risk to reward set ups.
Trading Forex with demo money where you have nothing to lose allows you to begin the rebuilding process. A demo account gives you the ability to rebuild confidence by taking risks you might not normally take if you were trading with real money, and it should help you pinpoint common mistakes you’re making with live trading.
No matter the experience or skill set a trader possesses, every trader is rattled by losing streaks. The solution is to take a step back, look at your trading plan and strategy from an objective point of view, and be able to see that what you thought was a winning strategy is not so reliable, and strategies you thought were too simple might actually end up working. The first step to turning losing Forex trades into winners, is to always have a demo account on hand.
2. Log every trade you take until you are profitable for three straight months
Regardless of whether you’re in a losing streak or not, every single trade you make should be logged by you, either in a regular Excel spreadsheet, in a trading journal, in a platform like Myfxbook or even on a piece of scrap paper. This will give you a good idea of how effective your trading is or isn’t.
3. Give yourself a weekly graded analysis
For instance, if your goal is to make 1 whole lot per month or grow your account by 1% each month, then in your weekly analysis you need to gauge how well you are staying on track to reaching that goal.
This will let you know what adjustments you need to make on a week by week basis. Don’t get too wrapped up in fallible metrics like total number of wins and losses or comparing win size to loss size, these metrics don’t necessarily define a profitable strategy, and so as long as you continue to improve towards your final metric goal then you are making progress.
4. After 3 months of being consistently profitable on a demo account, switch to a live micro Forex trading account
After you have successfully rebuilt your trading confidence and eliminated bad habits through use of a demo account, it’s time to take on a little more risk with a live micro Forex trading account.
A micro account can be considered any small amount that allows you to comfortably trade micro lots (increments of 0.01 to 0.09 per trade size) without putting up too much capital that you need. A micro account will help strengthen your nerves and polish your trading muscles without the large risk.
Continue to trade your micro account until you are profitable for 3 months straight, just like with trading the demo account. Also remember to continue logging in all your trades to help you achieve your monthly goals.
After 3 months straight of micro account profitability, graduate to a mini Forex trading account. With a mini account you get to increase your lot size per trade but are exposed to a little more risk.
But that’s alright with you, you’ve went through six months of rigorous back testing and have confirmed your trading abilities, and if you’ve followed each of the above Forex tips to help you stop losing trades, then it definitely won’t be a mini account that brings you down again.
5. Continue to learn and grow as a Forex trader.
You don’t have to go all out and enroll in the most expensive Forex seminar out there, but you should continue to actively look for quality Forex educational resources that will help build your knowledge and test what you know. Use Forex educational resources that help you grow as a trader.
Here are a few traits to look for in Forex educational resources:
- Honest, unbiased reviews of signal services, brokers and other Forex products.
- Daily insight from experienced traders, both in technical and fundamental analysis.
- Traders with insight into the world of institutional trading.
- Websites who are not going to send you an email every day selling the latest new Forex system, indicator, etc.
And that concludes 5 Steps to Eliminating Losing Forex Trades. Sure, everyone will have their own way of handling a string of damaging losses, but this a tried and true set of steps that is both simple and effective at helping you reset your trading brain to turn your Forex trading around for the better.
Have you found a better way to stop losing money Forex trading? If you have, we’d love to hear it! Share in the comments below!