I know no one can win in forex trading for every trade he does, but we can prevent from losing a lot with some forex strategies in place. Imagine that if you risk 2% of your trading account on every trade, a small losing streak of 5 trades will mean that it will cost you a 10% loss in your account. Although it’s not considered a very big amount, but the thought of losing 5 trades in a row is a very daunting experience for those traders who are just learning to trade forex.
You have to remember that the psychological of human is very reactive. We humans are very emotional when it comes to forex trading. In mathematics, we can say that we only risk a trade with 2%, but it can accumulate can becomes 5% the next time you have another trade . Why? This is because most newbies will make a mistake of overtrading or have the mindset of trying to revenge the losses they incurred. Before they knew it, they already lost much of their trading account. So what you can do is to take a break from the forex market if you have few losing trades in a row.
1. Kill Your Losing Streak – If you have noticed, losing streaks usually start off with small losses. It may be a little mistake that you have made in technical analysis or that particular day is just a day with bad luck, which leads to your lost forex trade. Then from there, you want to try again and hope to recoup the losses. But the losses amplifies and everything repeats again. In order to reduce losing streaks, you have to cut the losing streaks short and close the charts to take a rest. This will prevent you from wanting to trade more, leading to more mistakes made.
2. Take a Break From Trading and Clear Your Head – You might lose your concentration if you stare at the forex charts for a very long time or the losing streaks might be caused by information overload. Once you sense that, go for a short break before coming back again to trade. You should always look at the charts when your mind are refreshed.
3. Preserve Your Trading Capital – This is the most important forex tips. If you have lost all your capital, then how are you going to trade again? Always trade a small margin of your forex trading account according to your money management rule. This will prevent you from losing your hard earned money from making stupid mistakes.
When I was a newbie, I had some losing streaks using my demo account. Luckily it’s not a live trading account! During then, I did not implement any money management rule. Until when I realized that money and risk management is a important factor for me to be successful, I started using those rules and from then, my trading account kept growing.
So please do not be reckless in your trading no matter what your forex trading strategy is. Build your gains slowly and you’ll take a step to being successful in forex trading.