For many new traders, there is very little positive or learning derived from a losing trade; and a series of losing trades often leads to serious pain and disappointment. So, it is no surprise that, after a few losing trades, some new traders go in search for a new trading system: one which offers means of never losing another trade. There is only one tested and guaranteed means to avoid losing in forex trading. But before we get to that, let us consider some related concerns.

Why do many beginner traders seek means of avoiding losing trades? There are beginners who start trading without any prior education or training. After a notable amount of losing traders (be it under real or demo accounts), they begin to search for magic technics and or indicators that would ensure losing trades becomes a thing of the past. Unbeknown to them, trading is an endeavour governed by psychology and probabilities.

Every trading approach has its mathematical odds, and a trader’s ability to derive the best from a system is, primarily, dependent on one’s psychology, in addition to understanding and acceptance of probabilities. When the aforementioned traits are supportive, the trader’s focus will naturally shift towards minimizing the impact of losing trades, as opposed to attempts at avoiding them.

The best way to avoid losing trades in forex is not to trade at all. Oh yes! One either aligns with the markets and a system of approach, or keep away.

What Is the Most Important Thing in Forex Trading? 

As with almost any other market, the most important thing in forex trading is consistency of approach. There are a host of new traders who spend a short period of time in following a system, but after a few losing trades, they switch to another system, and then another, and the story continues. Some of those traders never spend time in analysing and journaling their trades, their approach to trade execution, or their win percentage after a series of trades. The end result is that their trading activities take on a resemblance to gambling: without the added benefit of entertainment value.

Putting aside the inherent differences in trading methodologies, when it comes to a new trader’s learning and development, the importance of consistency in approach is irreplaceable. 

Why Do I Keep Losing Trades in Forex? 

Taking a lose in trading is normal, akin to the cost of doing business. Taking a series of loses can be a little unsettling but it is still within the range of normal occurrence (depending on methodology). Consistently taking a series of losses is a crisis: especially for new traders who have just commenced on their trading journey. Now, there are several possible reasons for a new trader’s consistency in losing. It could be linked to one or more of the following: inadequate knowledge or inappropriate attitude toward and about trading (see The Five Levels of Trading), adoption of unsuitable trading methodology, poor execution of trading plan, little to no trade journaling and no revisiting of trade journals.

‘Success leaves clues’ (Dan Pena), but so does failings. To identify which of the above is most applicable to your consistency in acquiring losing trades, you must revisit your trade journals. If you currently do not maintain a trading journal (for any reason whatsoever), the reason for your consistency in losing is strongly linked to ‘inappropriate attitude toward and about trading’. If you maintain a journal but are unsure of how to use it within this context, we discuss an approach over here.  

When Is It Time to Quit Trading? 

Generally speaking, to quit, to give up or to surrender, is to fail ultimately. But there are times and situations within which stepping away is better than sticking around. People get into trading from all different works of life; and level of preparedness varies from one individual to another.

There are individuals who pursue trading alongside full-time jobs, and there are those who are academic students. There are individuals who have funded their trading activities with money drawn from life savings, and there are those who borrowed money from friends and or family members. Regardless of how one starts, it is reasonable to conclude that many new traders associate dreams and expectations with their trading activities: some of which may never materialize.

State of mind

Trading isn’t meant to be stressful. If ever you get to a point where your trading activity is notably, and progressively chipping away at the quality of your mental health, it may be time to step away from the trading game: at least temporarily. An unstable state of mind is never suitable for trading; when one continues to trade under such conditions, outcomes are almost always undesirable.

Strain on dependants 

There are individuals for whom the adoption of trading is an attempt to better the lives of their family members and other loved ones. But there are certain trading-related actions that can greatly endanger the wellbeing of loved ones. For instance, there are people who repeatedly redirect funds intended for the upkeep of their children or other loved ones into trading accounts. This often results in a degree of deprivation for those dependants.

If ever a need to fund and or sustain your trading activities presents an identifiable threat to the safety and stability of your family members or other loved ones, it may be appropriate to step away from trading: at least for a little while, until conditions become more favourable.