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So you’re on a losing streak and your capital is down by 50 percent from recent highs, you keep on punting away in the belief that you’re about to recover all your losses. You just know that if you can hit that big winner it will bring your account back up to where it was when you started. You are very excited about the prospect of making everything back you have lost recently and are looking forward to finally making some decent coin above and beyond your initial account deposit.

WARNING!!!! YOU NEED TO ENTER FOREX TRADERS REHAB.

While losing a few trades in a row does not necessarily mean you need professional help, it does mean you need to stop and pull yourself away from the market and objectively think about your trading decisions. Over trading and obsession with the market are two very real problems that many traders experience, with a little time and effort on your part you can easily over come these often made trading errors. This article will give you some good pointers in how to effectively pull yourself out of a rut of trading mistakes and help to push you on along the correct path. Combined with using price action strategies, a good mindset is crucial to trading success.

Rehabilitating traders 1 pip at a time

High my name is “insert your name here”, and I’m a trade-aholic, today my goal is to not make a trade. This cliché first born in alcoholics anonymous groups is just as relevant to alcoholism as it can be to trading. The fact is that over-trading is no different from alcoholism or any other form of addiction or lifestyle abuse. Many people become addicted to Forex trading and don’t even realize it, it is easy for forex trading, or any other form of trading to not seem like gambling because it doesn’t necessarily have the stigma attached to it as gambling does and is seen as a more acceptable profession than say, professional poker playing. However, once you start becoming preoccupied with your trading while you are away from your computer screen you have essentially entered the realm of gambling.

Problem gambling is any gambling behavior that disrupts your life. If you are losing money in the markets that you cannot afford to lose than you are at least hurting yourself and probably other people in your life as well. This is a really serious problem that needs to be fixed as soon as possible. It is just too easy to get sucked into the trap of believing you can make back the money you lost in the markets, only to continue losing it and continuing believing you can make it back. Just as the main theme of alcoholics anonymous is to quit drinking cold turkey, the only way to effectively eliminate your gambling habit in the markets is to stop trading with real money until you realize what you are doing.

Steps to recovery:

  • Admitting you have a problem with trading

Tell yourself each morning when you wake up that you are addicted to trading. You need to be consciously aware that you have developed a bad habit so that you can work on fixing it. The first step to solving your addiction to trading is to admit that you indeed do have a problem. Many people do not even make it to this first step because their ego is too big to even see the fact that they are over-trading and probably completely out of control. A classic hallmark of people with gambling addictions is not being able to control the impulse to gamble, even when they know their gambling is hurting themselves or their loved ones. The first step to being able to control your issues with over-trading and risking too much is to admit that you are an over-trader and also to admit that you are being careless with your money.

  • Work to retrain your brain

An essential component to effectively solving your trading addiction is to work on retraining your brain. The reason you are stuck in a cycle of destructive trading is because you have most likely reinforced bad trading habits by getting lucky on a few big trades. Once you hit a few big winners you have wired your brain to expect the same out come from similar behavior in the future. If this behavior was risking 20% of your account than you will probably continue to do that because you remember how good it felt when you risked 20% of your account last time and doubled your account value. You then continue to do this until you have lost all the money in your account; it is only a matter of time.

The first step towards effectively retraining your brain to eliminate bad trading habits is to quit trading with real money. If you still feel the urge to trade than you must force yourself to only demo trade until you can prove to yourself that you can control your behavior. For example, you could set a goal of 5 winning trades in a row in your demo account before moving back to a live account. Make sure you are only taking well defined price action setups in your demo account and concentrate on only risking a very small amount per trade, less than 3% of account value. The only way demo trading will help you retrain your brain is to treat it as if it is a real account. You need to just forget about the fact that it is not real money and treat it as if it is. Only after you have proved yourself on a demo account should you allow yourself to switch back to real money trading, this will work to build your confidence as a trader and as a person because you will have to prove that you can control your actions before rewarding yourself with a real money trade.

  • Other exercises

Increase the extracurricular activities in your life. One of the classic symptoms of compulsive gamblers is that they are so focused on their gambling activities they lose sight of other priorities in their life. Professional traders do not sit and watch their charts all day, they have gotten to the point of trading Forex full time because they know that spending obscene amounts of time in front of a trading screen is not the way to consistently make money. In fact, there is actually a negative correlation between time spent analyzing the markets and the amount of money you will make, in essence, the more time you spend thinking about, worrying about, or watching your charts the less money you will make overtime. Warren Buffet did not become the wealthiest trader in history from staring at charts all day. He essentially used the “set and forget” method of Forex trading; you find a high quality setup, enter your entry and exit parameters, and then let the market do the work.

One way to consciously reduce the time you spend trading is to focus on other activities, if you have a full time job than go to the gym after work instead of racing home to look at your charts. The charts will be there when you get home, no matter what, there are constantly opportunities forming in the markets. One big issue most traders deal with is worrying about missing trades; this is one of the silliest mistakes to make, but also one of the most common. You just have to accept the fact that the Forex market is constantly ebbing and flowing, you are going to miss many trades, that’s just the nature of the beast. If you go chasing every trade that you think “looks good”, you are going to blow out your account faster than you ever dreamed possible. Don’t worry about missing trades; trading should be done at a certain time each day, for no more than one hour or so. Set a certain time period each day that you will interact with the market, and then shut down your trading station for 24 hours. You are not going to improve your long term equity curve by messing around with stop losses or profit targets once you have entered a trade. All of your trading parameters need to be set before entering the trade; this is the time you will be thinking the most objectively and clearly. When you starting meddling with your trade after it is entered you are working off pure emotion and have cemented your name in the wall of trading addicts.

If you know that you are a trading addict than you need to schedule activities to fill the time that you normally spend over-analyzing the market. As previously stated you should join a gym or exercise some other way, exercise clears the mind and cleanses the body, it will lift your spirits and help you to think more objectively, any serious trader should have a regular exercise schedule to aid in overall trading performance.

  • Make the market work for you, not against you

One thing that everyone can agree upon is that the forex market exhibits extreme volatility at times and often develops some very strong trends within the various currency pairs. The way to make the market work for you and not against you is to harness the directional power of the Forex market by risking a very small amount of your account and letting the leverage grow your small seed into a huge ball of profit. The problem is that most people do the opposite; they start off risking a very large amount and the emotional mistakes that ensue as a result of risking too much end up turning a large sum of money into nothing, very quickly. The only way to feel in control of your trading activity is to begin by risking an amount that you sincerely do not mind losing. You should have no problem sleeping at night when you have a trade on, if you can’t sleep because you are lying in bed thinking about your trade than you have a problem, you are Forex trading addict, and the market is going to chew you up and spit you out faster than you believe. The market is uncontrollable, but you can harness the power of the leverage it provides by controlling your behavior by only taking A+ setups and consciously being aware of how much money you are risking per trade.

nialfuller

About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008.
Checkout Nial’s Professional Forex Course here.

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42 Comments

  1. Joe Smith says:

    i like this piece of writing. it is educative.keep up!!!!!!

  2. Marinus says:

    You hit the nail on the head.What is the motivation to become addicted? Greed? Uncertainty? I hope that the traders will take notice and do something about it as soon as the symptomes knock on your door.

  3. julius says:

    Nial
    there is no difference between me and a man looking for a pin in the darkness.Thanks for the bright torch light you offered me.Remain blessed.

  4. Gerardy says:

    Nail, I can tell you talk from experience. I had been glued to screen almost the whole day everyday before as a newbie and my account keep dropping like leaking water.

  5. Ampurira Grace says:

    Hi Nial…
    thank you for the traders rehab…its all i needed to make a difference in my trading life..Forex Trading had become all i care about, think about and dream about…even when i knew i had a correct entry, i sat all day long watching the trade with all the frustration that comes with it..I cant say am now “very good” at not watching the market, but i have greatly improved because i can afford 2-4hrs not looking at the screen. And i must say it has improved my confidence that am doing the right thing.
    God bless you for your support to the newbies especially…coz am one!

    Grace.

  6. Greg says:

    Hi Everybody, first time I went to a casino with a fake ID I was 16, 15 minutes later I won the casino’s jackpot not even knowing how the slots work…;) Spent all my money on clothes parties etc., my mom asked where I got the money from I said I won it in a casino. Tolerant and ruse as she is she gave me some more money and said go to a casino and win again. I went again and won another jackpot ;) It’s a true story. Needles to say my brain was WIRED for the next 15 years…
    It’s a ‘physical brain wiring’ that influences future expectations based on previous experience. So powerful and can be very destructive!!!!

  7. PERI says:

    Thank you for your outstanding article,
    and it helps us a lot in improving our mind set.

  8. Nindy says:

    Nial,
    All I wanna say is preach on! I’m in rehab and I’ll be doing your course as part of my recovery.
    I love the article.

  9. eric says:

    Thanks Nial
    It’s really can help me better progress

  10. Richie says:

    Amen brotha!

  11. Radha says:

    Dear Nail,

    Your articles are always REFRESHINGLY honest and clearly help many Emotional Traders like me.

    I have made ALL the mistakes you so eloquently describe in your lessons/ articles. Clearly they are HELPING me become a better trader. I am NOT there….but making slow progress..it is not easy to change flawed habits….it takes a while.

    Regards & Thank You,
    Radha

  12. thambirajah says:

    Hi Nial
    I have been reading your articles for some time now and I feel that these articles are especially written for me. They are really wonderful and very interesting to read. I am making all those mistakes you have specified. But I am still willing to learn and your articles give me so much confidence and I think I am re-considering my thought of giving up altogether.
    God bless you. Keep on writing and I think these articles will benefit a lot who are on the same boat as I am.
    Regards
    Thambirajah

  13. Matthew says:

    Definitely my problem was feeling like I was going to “miss the good trades!” I will remember this article next time I can’t stop staring at the computer screen! Thanks Nial!

  14. hertanto says:

    Very true lesson, I think every trader should learn from you, I feel lucky finding your website. thanks alot.

  15. Jim says:

    Thanks Nial – A great article. I can easily relate to it.

  16. Kevin says:

    It is very easy to get caught up in this kind of behavior when you are starting off, this is great advice Nial as usual, thank you very much.

  17. Ty says:

    I must say Nial I am addicted your website LOL!!!! I come to this site almost every second to learn something Goodstuff!!

    Thanks Much
    &
    May God Bless

  18. jacob says:

    compliment of the season Nial. Good article and as usual it is filled with sound trading wisdom. The way to profit is to risk less and not be addicted to your trading. ONLY ONE TRADE CANNOT MAKE YOU. Thanks and God Bless

  19. nyoman says:

    you have opened my eyes…thanks Nial..I’ll buy you Bintang when you get to Bali..cheer!

  20. Vitalie says:

    Hi Nial, Thanks for you free articles, very useful. By reading you articles I can see the mestakes I`m making and helps me to get on the right path in trading, thanks ones again.

  21. Abdul Rahim bin Mohamad Taib says:

    Nial,your honest and frank advise makes a lot of sense and indeed is an eye opener.Looking forward to joining your course.

  22. Andy says:

    Nial, you are very good man, share a talent for free.
    God more bless you.

  23. thulasi says:

    this is a great article that every trader who might encounter great loss must have to read. thanks for making this article to known the reality. thank u

  24. Steve says:

    Nial,
    Just wanted to let you know your site is a breath of fresh air. I’ve traded nearly everything in the last 9 years, options (long and short), futures, equities, etc etc all except Forex. Came across your site recently, whilst researching forex Price Action. But your site is different, you don’t peddle systems, and you cover all facets, including what IMO is the most crucial: psychology. This is a brilliant artical, and everyone in the business should read it.
    Well done mate and keep up the good work – you’re one of the (rare) good guys.
    Cheers

  25. Dave says:

    Nial,

    this article has hit a raw nerve with me, I have blown so many accounts and lost thousands over the past few years trying to learn this business ! I have demo traded and done well for months but when it comes to real money Greed takes over and I am out of control. Its good to know its not just me and this is a problem than CAN be overcome.

    thanks

  26. abed says:

    Discovered your site a few days back,every time i go through your articles,its like you’ve been watching me very keenly of late.
    This particular lesson is so true and shamelessly puts things as bear as they are,thanks a lot you couldn’t have put it any better for any sincere Forex trader.

    Already feel like someone is helping me by the hand.

    Good job and thanks once more.

  27. haastrup says:

    nial youre such a great guy, im feelin your tip interesting, keep it up.

  28. Mike says:

    Many thanks for holding up the mirror! I have been slowly getting more relaxed about my trading, leaving the room when I’ve felt the urge to exceed my target of 1% of balance.

    Thanks again for your words of wisdom; it’s definitely 90% psychology and 10% ability!

  29. galen says:

    As with most of your articles Mr. Fuller the content is real and most helpful even for us who have been demoing. This information is set in my mind to refer to if and when this trading problem occurs even as I demo. Thanks.

  30. Walter Mattarollo says:

    You have read me like a book, I am so glad that I am still sim trading,still have a chance to fix things

  31. Nlean says:

    Having blown 2 small accounts I’m on the path to Traders Rehab.
    Overtrading has been my greatest mistake and I beginning to realise I need to take my profits then close charts for the day.
    I’ve learnt the hard way I need to keep track of risks/pip size after a few losing trades not hope one good run in my favour will recover the losses.

    Great article Nial :D

  32. Ironn says:

    Thanks Nial, Very informative article!

  33. Zacharias says:

    It is the only job I have ever been addicted to. For the first time in my half a century life I’m looking forward to Monday mornings……… :-))

    10 months on and still just above water. When I get bored I will know that I’m a proper trader. :-))

  34. Cava says:

    Hi Nial,

    i would like to thank you for your method and price setup. Your video and article help me a lot and improve my mental and psychology

    I’m being recover all the money i invested in Forex and now start making consistence profit.

    Your rock Nial.

  35. udechukwu says:

    Mr Nial Fuller thank you very much for this article,its as if you wrote it specifically for me.am a trader who started trading in 2009 but,have been loosing until one of my online friends recommended your website for me.pls what is your advice should i stop trading on my real account and concentrate on demo?

  36. Janko says:

    Hello Nial,big thanks for your infomative and inspiring article and your good webside.

    Kind regards

    Jan

  37. Jeffery Hoffman says:

    I can personally say that this article helped me. I checked myself into trader rehab, and I am a better trader for it. The only way to recover from losing is by keeping a journal through every step of the trade. Self-honesty is your cure. Why you are taking the trade and how you feel. That is where you will find your mistakes.
    A successful trader has a record keeping system. Thank you Nial for your valuable insight and guidance.

  38. Mike says:

    Absolute truth put out in the open. All traders should read this. Thank you.

  39. jon says:

    You certainly touched on some truths there. thanks

  40. Dan says:

    Hi Nial,

    Good morning for you. I am watching your site with great interest. I feel that the trading strategy (set and forget)is a “social” strategy, oposed to the “antisocial” strategy used by ” tradoholic” traders. Even my wife apreciated this!!! So, I am a fan of your site.If you ask yourself why I do not take the course yet, the answer is that I shall do it very soon, but I didn’t asimilated yet the other courses that I took.

    Have a nice day

    Dan

  41. faraj says:

    Worrying about missing trades was my biggest problem. Got relieving answer here.
    Thanks Nail.

  42. Joshua says:

    Nice 1 Nial. Your honesty is refreshing.

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