How to Overcome Losing Money in Forex 

October 28, 2020

Read time: 5 minutes

The most distinguished Forex traders are not perfectionists. They also encounter losses, at least occasionally. Failures may not be eliminated altogether. Your goal is to make them as rare as possible.

Novices err due to inexperience, sloppiness, or emotions. Even the system itself may let you down. Technical disruptions like system crashes are also possible. Sooner or later, you will lose money. But how can you scale down those risks?

Nobody likes feeling defeated. Failed trades cause frustration, annoyance, and disappointment. Still, they are not disasters. Neither do they justify giving up? Do not abandon your dream of a trading career just yet. Your performance will not always live up to your expectations. Resilience is important for everyone, as even professionals make mistakes.

It is natural for humans to question themselves after a failure. Big losses are undeniably hurtful; they cause us to wallow in self-reflection. On the one hand, mistakes may cause hesitation. On the other hand, you may feel the urge to chase losses and open more trades to cover up for the damage. This is a road to failure. In the end, you will only lose more.

How to Avoid Losing Money In Forex

If the loss is severe, bouncing back is complicated. Discover a few proven hacks to help you. Naturally, you cannot turn back the time and replenish your account. Still, your confidence will be repaired much more quickly. Here is what to do after losing money on Forex for the first time.

1. Reframe Your Mistakes

Everyone can be in error, even stellar traders. It is impossible to make the right choices 100% of the time. Rather than muse over your shortcomings, look at the big picture. Use this experience to enrich your strategy.

A toxic misconception is when you let a single failure define your entire life. Do not let mistakes haunt you. The faster you eradicate negative thinking, the better. Change the way you perceive mistakes in general.

How to avoid losing money in Forex? Look ahead instead of dwelling on the past. Do not be afraid to make mistakes again, or hesitation will hamper progress. Your goal should be to learn from your blunders and make sure they do not recur. Failure should not cause paralysis.

Of course, this is easier said than done. This is especially true for those who are only just starting out. Remember, if you set off on this journey thinking you will always be right, disappointment is guaranteed. Nobody becomes a millionaire overnight. Success in trading requires perseverance and knowledge. In this realm of knowledge, learning is perpetual.

2. Learn From Your Failures

After making a mistake, study your actions closely. What exactly went wrong, and was the loss preventable? Rather than wallowing in frustration, find the courage to overcome the shock and use it to do better in the future.

First, re-evaluate your strategy. Are there any weaknesses to work on? Is it worth staying the course, or would you rather adopt another system? This is important for novices and experts alike. The longer you trade – the easier it gets. All real pros bounce back quickly, as they have been through failure many times.

A trading journal will help you with proper self-reflection. Note down details of all trades, including your motives for entering and exiting the market. It is important to evaluate the real causes of losses. Have you done anything wrong? In some market cycles, winning is simply impossible. Look back at your own performance and draw valuable conclusions for the future.

How to Avoid More Mistakes

Replacement is a great way to fight negative emotions. When you are overcome by the shock of losing money Forex, focus on defining the next steps. Determination should be your usual response to failures. Think about the future and what is required to achieve a better outcome. You have made a mistake and lost money. Acknowledge it as a fact. This is not the end of the world, though. Let it spur your professional growth.

Losing Money in Forex

Enrich your knowledge of the Forex market. Learning and improvement should never end. Keep an open mind and always be truthful with yourself. Did failure result from inexperience or lack of education? If so, there are plenty of resources that can help you.

Returning After a Loss

You will resume trading sooner or later. The faster you do it – the better. Follow our tips to do it properly. First, make your recovery gradual. After a losing streak, you should always start small and exercise caution. Pay close attention to the management of risks. You should never jump back to the same position size. 

As profitable trades appear, your confidence will be restored. Even a modest profit can help you rebound more quickly. Winning days is when larger volumes are permissible. If you notice that the results are consistent, increase the size of your positions. Always be careful and avoid going to extremes. 

To conclude, recovery should be slow and measured. If the loss was spectacular, and you feel devastated, take a break. Recharge your batteries for a few days before returning to the market. What does not kill us makes us stronger, if you only allow it enough time?

Of course, you may not like trading small, especially after you have traded impressive position sizes. Still, it is always better to be safe than sorry. Can anyone deny that?

Take Your Time 

Return to the market refreshed and ready for new challenges. Unless you are prepared mentally, financially, and strategically, you will fail again. Do not let the cycle repeat itself. Otherwise, it will turn into a vicious circle.

Do not aim to win your money back as soon as possible. This is a flawed mentality. You should be focused on the re-evaluation of actions and the implementation of better strategies, more accurate and effective. The money will eventually come back, but do not expect it to happen overnight.

Back With a Vengeance

Seeing your account melt is a painful experience. Nobody can deny it. Even if you are prepared for failures, mastering your emotions is a challenge. In the Forex market, your risks may shoot through the roof. Implement a calculated risk management system.

Compare this to a maths exam. Even students who prepare and know the theory may be paralyzed by the example given. You know all the recommended moves, but somehow fail to use them in practice. This is how every trader feels at some point in their career, most commonly, at the beginning of it. Do not expect the market to meet your expectations all the time. Do not let it crash your self-esteem, either. Develop your mental toughness.

Conclusion: Losing Money in Forex

At the end of the day, successful trading relies on experience. Nothing can replace real market action. If you look at the biggest stars in the industry, these are professionals with at least a decade of experience. Most of them are middle-aged.

Developing a trading career is like stepping into adulthood. As you age, it gets more fun. You feel that you have seen everything, and history repeats itself.

Here is another important takeaway: never risk too much on a single trade. Remember that beginners should not aim for colossal profits. Instead, they need to get used to the environment and learn how everything works. Start small and apply different strategies to find the most suitable method. You are here to learn, not to game the system or make a million.

Keep track of fundamentals that affect currency rates and use combinations of indicators. If you are a technical trader, never act on a single factor. Confirmation is crucial. Always look for confluence – a situation when two criteria point in the same direction.

Eventually, time puts everything in its place, just like in everyday life. Don’t even think of raising the bar until you have had at least 10 winning days in a row. This is when you can gradually increase position size and risks. Remember to set stop loss and take profit for each trade. This way, you know exactly what price you can get in case of victory or failure.

Every success or failure is your opportunity to become a better professional. Do not focus on money alone. Greed and complacency will get you nowhere. Instead, make steady progress. Sometimes, losing money in Forex is inevitable, but it is never the ultimate disaster.

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