"One of my worst moments in Forex as a beginner was when i placed a trade unknowingly during the news release, and i experienced a spike, which went very fast against my trade. My new live account got blown off in one day".
"Most traders fail not necessarily because of what they didn't do correctly but simply because of what they did not know." - C.E.O FXTradeCity
What a headline! I guess you had expected something different like; tips on how to increase your Forex account to mega figures. However topics like that has lesser impacts on your overall productivity compared to understanding what would make your account dry out after few trades.
One basic fact in Forex trading is that it takes several months, and possibly some years to grow a steady positive account. On the contrary it takes few minutes or few trades to blow off an account no matter its size.
This article reveals the signs, and likely factors that causes traders to blow off their accounts within minutes or after few trades.
This article reveals the signs, and likely factors that causes traders to blow off their accounts within minutes or after few trades.
Abuse of Lot Size: Leveraging in Forex makes it very appealing but somewhat destructive if it is not used appropriately. If trade moves to your favour - great; but when it goes against you, it goes real bad. Unfortunately the high value of the spread on some currency pairs increases the effects of position sizing especially during volatile sessions. This increases the value of losses when the market goes against you due to wrong lot size orders. A major factor that makes traders abuse lot size is greed, impatience, poor knowledge on leveraging, and trying to get back at the market after series of losses.
Some traders leave out stop loss because of alleged broker manipulation (stop loss hunting). However it is much better to use trade management tools to place stop loss that the broker cannot see or manipulate rather using mental stop loss.
Hurrying to take a trade, bad trade habits, and over confidence are some of the reasons why traders make this mistake.
Over Trading: When you always "feel" like trading irrespective of whether the market is set for trading then your account will get wiped out in no distant time. The urge to trade would not force the market to your terms. You could be ready to trade but the market isn't ready to move. Over trading also involves placing abnormal amount of orders especially without a trading plan either because of the fun of it, anxiety, urge, and the need to meet your targets very quick.This will put an account at the verge of crashing down.
If you have such combination of systems like this in one single account then you need to scale their lot sizes appropriately or use tight money management else your account could likely get wiped out to over margin exposure when the market goes haywire.
Breaking Money Management Rules: This is the biggest mistake of them all. Every trader ought to have a trading plan, which ideally should include money management rules. Money management is the key to keeping your account alive after series of losses. When you break it, there's a penalty to pay even the worse penalty - which is a "blown account".
These are the Eight (8) major causes of trader's mishaps that cause their accounts to get blown off.
kindly share your worst or good moments here with us so everyone can learn.
Also keep this in mind; in Forex there will always be a downtime, but successive traders are those who minimize them.
