As a trader, you never want to blow your account. If you ever face such a situation, you may have felt frustrated and become helpless.
So, what can you do?
How would you come out of such a crisis?
Want to get an answer….
You are in the right place…
How do you avoid blowing the forex account?
Simply, you can do it by adopting some easy ways that are research, check emotions, patience, trading rules, performance analysis, trading network, and risk management. If you follow them you can save your trading account by quitting.
If you are in the learning phase of forex trading, you may end up blowing one or more trading accounts. However, the main cause of blowing up trading accounts is insufficient money management.
Let’s read carefully this post to know better about saving your forex accounts!
7 Ways Not to Blow Your Account
If you think trading and investing the same thing, you are wrong….
Both are totally different from each other. So, if your planning to invest in the forex market, skip this post. But if you are already trading, the following tips are only for you.
They will help you to save your account from blowing or closing due to loss. Let’s discuss them in detail:
1. Do Your Own Research
Do you want to be a full-time trader in the forex market? Keep in mind that never follow others blindly. It is the main principle of each professional field to do your own research before taking any decision.
If we just follow other’s footprints and don’t think of ourselves, sooner or later we will be destroyed. It applies to trading because the person you are following may have some motives from which you are not aware.
There comes another issue that is delaying. When you trade by following a person, there is no guarantee for the payment you get will same as that person did. So, go blindly behind someone to get you to burn.
It’s ok to take advice from people and hear them, but in the end, while trading, you must do what you want.
Do research on all aspects of trading and make the best decision.
2. Check Emotions at Early Stage
We have discussed a lot about controlling emotions in our previous posts. Now you are able to notice how important to keep in check your emotions while trading.
Trading with emotions is the biggest cause of a trader disaster. Let’s check this example:
Just imagine, you have 200 shares of APPL and it breaks down with 20 points. So, you may have the loss of 4000 _that is too big for you to lock in. Many people wait for the stock to recover instead of booking such a loss.
At last, that loss becomes wider and the person has to face a bigger hit in few weeks after waiting for the stocks.
On the other hand, some people are captivated by greed for more profit. So, when the shares go up 50 points, most people find 10K profit enough and will sell out. But other traders wait until the stock stops moving.
Unluckily, they will ladder out of their position and will exit from the stock. So, if you have control over your emotions, trading will become easier for you. There will be no need to blow up your account.
3. Be Patient
Steadiness is the main rule of trading. If you want to get success in the long term, you have to be patient in this game.
Many traders blow their accounts 2-3 times in their trading career and stop quitting trading for good.
For best trading, you have to stay in the game with discipline and consistency. First figure out the position size and trading style on which you have to work. Complete your monthly and yearly goals and stick to them.
To avoid blowing forex account, don’t try to become rich overnight. It takes time to get big profits. If you try to make 50,000$ per month and stick to it for 3-4 months. It will totally change the game.
Such trades bring a lot of risks and damage your account badly.
4. Create Your Own Trading Rules
You may learn constantly from your experience while trading forex. If you find anything different in day trading, write it down. Soon you will make your own rules of trading in the journal.
Over time these rules will prove helpful in times of crisis. Similarly, each trade has a need for documentation with detailed explanations. It mentions what you have to work on or the problems you have to face.
Make it a habit to look at the journal weekly. It may lead you to high successful trading.
5. Inspect Your Performance
At that stage, it is important to figure out what is working for you. Are you able to work as a short trader or long?
You can solve all your problems by analyzing the performance of your trades and learn from outputs. If you want to calculate the stats, import your trade into any analytics software and get the results.
There are a number of stats, you have to search them and select some of them for analysis. In this way, you will be able to avoid blowing accounts.
6. Get Attach with Network of Successful Traders
No doubt you are a good trader but the market is smarter than you. Sooner or later, you will feel the need for a network that has solid traders to exchange ideas.
The market requires traders who can adopt constantly market conditions and several trading patterns.
You can adapt faster the techniques by joining such networks. You can also learn from others and shorten your learning loops.
7. Learn Risk Management Plans Accordingly
There are a number of traders who don’t know about risk management and end up positions at large sizes which they can’t handle.
Risks are also increased by adopting such positions. So, if you are not feeling good with such losses, try to reduce the size of positions.
If you don’t want to blow up your forex account, you must have access to trading risks and make plans according to them.
How to Recover from A Blown Forex Account (3 basic steps)
There is no way to survive in the forex market without paying any tuition. The three-step process will help you to come out of such a situation if it happens to you.
Let’s get started to learn:
Step 1: Take A Break
For the revival of your account, you must take a break of at least one trading week. Such breaks are for your family. Spend time with them and find outdoor hobbies.
Step 2: Review Your Trading Blog
After taking a break, try to find out the problems by looking at your journals carefully. You need to figure out the disturbing issue. Check the time frame, trading frequency, and risk ratios of past trading.
Step 3: Cut Every Thing In Half
If you are trying to recover your account, the worst thing you have to do is cut everything in half. Set scales up and down across the board. You should have to reduce your trading account and risk per trade.
How does a forex account get blown?
Forex account blowing means you lose 100% of your money while trading in the forex market. Many new traders face this problem when they don’t take forex trading as a business and start it as gambling.
What happens if your forex account goes negative?
In this case, your trading account balance goes negative. You can cover it to control exceeded loss by making a deposit later.
What does blowing up your account mean?
This term describes the complete failure of a trader, corporation, or hedge fund, etc. Mostly it is used when a hedge fund fails.
To summarize, we may say that if you blow up your account due to loss, you can revive it by adopting major rules of trading.
Sincerely, I hope that the above-mentioned 7 ways prove helpful for any traders out there. In my opinion, these ways can be used equally both for newcomers and advanced traders.
Though new traders have to pay more attention as they extend themselves too much and get carried away by market trends.
I feel pleasure to share info related to this topic with you and hope in the future I will be able to come back with more informative posts.