Eliminate the Big Forex Mistakes

Big Forex mistakes will reduce your account balance until you go down to zero. When I say big mistake My definition is this: large losses over 5% of your account balance at one time. These could include margin calls which could be greater then a 50% loss at one time. Now that is what I call a big mistake!

With Forex trading, consistency is so important to achieve long term success. Doing the right thing day in and day out without making the big mistakes that will destroy your chances at success. Let me give you a real life example of something similar you can apply this to.

When I was in high school I played tennis for the school tennis team. I was an average player without any great skills. However I noticed that when I tried to make a killer power shot I would hit the ball over the fence or into the net. Making a big mistake every time would eliminate my chances for success. The key was it was not the opponents skill that would cause me to lose, it was my mistakes. When I realized this I changed my game to begin to work on eliminating those mistakes. Instead of killing my opponent my goal became to eliminate my own mistakes. As a result I kept the ball in play more often which gave the opponent more chances to make a mistake. So when I began to focus on keeping the ball in play rather then the big kill I did much better and experienced more success.

So the purpose of that story is to advise you traders to stop going for the big kill. Keep your trades small, and consistant and over time you will achieve long term success. By making big mistakes you take yourself out of the game. When I say big mistake I mean large losses over 5% of your account balance at one time.

If you have any tips on how to avoid these mistakes please post them in the comments below.

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Casey Stubbs is the founder of Winners Edge Trading, which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.

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  • Trader Sotka

    Same problem. I trade FX and paly tennis. I can sign under every word in this post.

  • Thats also true, the market sometimes pauses for a long time and moves slow and then bam when we least expect it, it moves fast. Patience is a tough thing to practice. What happens to me is sometimes the pair I trade stops moving then I see another trade that I wish I was in. I however have learned not to jump around and just accept the trade that I am in.

  • Patricio A

    For me the hardest thing is when a trade is in negative too much time, like eurnzd the other day, after hours of wait I start to fell bad and expect the first opportunity to close at be or with a little profit only to see how the pair move a lot of pips in the direction of my trade.

  • I try and fix this problem by not trading anymore, ideally I try to not trade for awhile after any given transaction, whether its a winner or loser. “Ideally” lol It sure can be hard to live up to that!
    I still trade too often, I had a guy on FB tell me that this week in fact. Told me my 10% gain for last month was not good! It was to big, so to risky.

  • Very true, this is where I start checking the reasons I went into the trade in the first place.
    One key thing I do is constantly look for reasons NOT to be in the trade, or NOT to take a trade in the first place. This has helped tremendously.

  • Very good point Bal, knowing what market I am in at any given time has has been a key tool in the belt. One I have had the hardest time with in fact, since I am in the Mountain Time Zone, and have many other things I am doing in the real world of brick and mortar.

  • Good point. If you get the wrong entry close for a 5 pip loss and try again. However this type of trading can get you quite a few losses very quickly which will add up.

  • I used to hate taking losses and would wait forever and take big ones. Now I close it knowing that I will make it back and then some very quickly.

    There is balance to be held however because sometimes you just have to have patience and wait for a trade to develop because a trade can hang in one spot for hours before it moves in your favor.

  • hi, i watched a professional trader who trades on a minute frame (after drill down), for entry point, his stops are 7-10 pips away, his attititude is if the trade does not go in your direction immediatly then why did you take it? so it must be a wrong entry point, or worse the trade will go against you, look at the time overlaps of the markets to catch the momentum. A 25 pip move when the uk and usa are open is more significant then when volumes are less.

  • Hi David, nfp report on friday, long on gb/jpy, even in early, saw it jump 150 pips, which i montitored from my phone at work, and then down almost 130 pips, my limit was simply too high. Take the market into account

  • I have come to hate the losers, I just try and close them right away. A losing trade by definition must be a mistake, so closing and moving on is the best tool I have found for not getting stuck in a trade that ends up killing me.
    I tend to get fed up with trades if they go more than 25 pips against me. The hardest part of closing a trade that is down 25 pips is deciding if I should close it or not. Will it go my way? Will it work out eventually?
    I always tell myself…”there is always another chance to get an entry later”…
    The actual pips amount that makes me lose my patience depends on the time frame being traded too, if I am going for a trade on the daily, 25 pips will not bother me as much as it will on a trade off the 15min or 60min time frame.

  • Here’s a mistake from this week. Fighting sentiment. The GBP is very weak compared to a very strong AUD. Thursday/Friday general market sentiment was up causing generally weaker dollar. Why spend my time trying to fight for few pips shorting the GBPUSD when the AUDUSD long was in play again after the NFP report shake out. If you are trading short-term and fighting daily sentiment you will quickly turn a winning week into a losing one as I did.