In today forex faq, I am going to discuss a very interested question from one of our fellow traders.
Below is the question:
Hi, in early July I discover a strategy wish I apply on my demo account of $5000 in that July alone I turn that account to 32k+ but in August, I have lost 20% of that account the trading opportunity was not there again. what can I do?
I bet this is something that tends to happen to traders and that is the reason why I ask you guys to have 3 consecutive months of profit trading before going live.
There are a few reasons why you are experiencing this:
1) Strategy – Do note that there are some strategy that work only in a trending market and some that only work for ranging market. If you do not understand which market your strategy works best in, you will often encounter the above question.
Therefore if you have a strategy that you are going to trade with, you can do a demo trading and then record down the situation where you are making profit and situation where you are losing money. This will tell you which market your strategy work best in.
That is also why I say a trader should have one or at most two trading strategies on hand as one can work on a trending market while the other on a ranging market.
2) Luck – If you are in your first month of demo, there is a high chance that you are lucky for those profit you are making previously. If you find that you do not have a fix method of entry or fix criteria for trading, you are trading based on luck.
If the profit you are making for the previous month are all done based on a strict trading plan. Then you are not likely to be in this category.
What I want to say here is do not be discouraged by the small setback you are facing now. Keep trying to see if you can become profitable next month. If you are facing one of the above problem, do some reflecting on your strategy and then figure out what is wrong and you will be ready to rock.