This is a topic that I believe no one of you wanted to experience but it is inevitable in the world of forex trading.
No matter how good you are or how successful a trader can be, it is impossible to not have a losing streak which is the consecutive loses in a row. This is because the best trading strategy can only generates a winning percentage of about 70% to 75% which gives you the chance of losing 25% to 30% of the time.
However what really separates a successful trader from a failing trader lies in the way they handle their losing streak.
This is what a loser trader will usually do and this is exactly what I used to do in the past when I first began to trade.
1) Averaging a Losing Trade: There is nothing worse than this, imagine you have entered 2 lots that are making a loss of 20 pips each at the moment and you start to enter another lot trying to average the entry price. If you are already wrong, how do entering another lot helps and this will only increase the total amount of loses in the end. In fact this is the number one killer for new traders and this is why they never make it for more than 3 months.
2) Revenge Trading: You find your position getting stopped out and you incur a loss. The problem is you are not happy with a loss for the day and you will then enter trade based on emotion trying to make back the losses which will in turn brings you more losses. I believe most of you may have this problem when you first started trading but it is definitely one that must be overcome.
The above 2 factors are why most new traders never make it in this field. The correct way of handling a losing streak is to write down what causes you to place a losing trade in your trading journal and then refine your forex trading plan to warn yourself about it in future.
Nowadays when I get a losing streak, I will record down what I see and then log out of my trading account so that I will not commit the above 2 mistakes.
I will then go to read some forex forums or do something that I like so that I will not think about the losses. After 1 hour or so, I will then analyse what has went wrong in my trades and then come out with some ways to prevent it in future.
Learning through mistakes is how you can horn your skill and eventually become a better trader.