As they always say, Forex trading is not suitable for everyone. In fact, only a small percentage of traders are successful. All the rest are losers. There are habits that hugely lead to killing of accounts. This can happen slowly or in a minute!
You need to know what type of a trader you are, a high risk trader or a low risk trader.This way you will be able to find ways of trading without blowing of you account. In general, there are trading methods or habits that can easily kill your account. They include but not limited to:
Risking too much in one trade:
Even the best trader does not win 100% of the time. Some trades end up in losses but what matters is remaining profitable in the long run. If you risk too much in a single trade, then your account might not live long enough to see tomorrow. This mostly happens to the high risk traders that want to get rich overnight. Well, their accounts get blown off sooner rather than later. That’s why you will see a guy making 1000% profit in a month then loses it all in the following month. The low risk trader eventually takes the day in the long run. It’s advisable to not risk more than 2% of the account balance per trade. That way, a single loss does not hugely affect the account. The losses are recovered from the profits made later on.
Trading with emotions:
This happens to all the traders at some point but mostly happens to the guys who are new in the business. It’s hard to stare at the charts waiting for your trade to hit stop loss and even harder to wait for your trade to hit the take profit target. The patience is just never enough. Many are the times that the traders adjust the stop loss hoping that the price will not go further up or further down or bring the take profit closer hoping that it will get triggered faster. All these emotions end up messing up the trades and generally contribute to losses. It’s best to stick to the strategy and avoid trading with emotions.
There are some traders that treat forex trading like a casino and place trades randomly without following any strategies. These traders blow their account sooner rather than later. They might have a few wins that make them risk even more feeling all lucky but eventually end up losing everything.
Lack of consistency:
There are types of traders that have new strategies daily. Once the strategy they are using makes a single or a couple of losses, they dump the strategy and hop to the next one. This goes on and on until the account dies. These types of traders are always hopping looking for a holy grail that will be profitable 100% of the time. Their accounts do not live long enough to find the holy grail. It’s best to be consistent and to stick to one strategy until you have a good reason to change to another one.