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Nial Fuller

NIAL FULLER
Professional Trader, Author & Trading Coach

How to Not Lose Your ‘Shirt’ Trading

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By in Forex Trading Articles Last updated on | 51 Comments

A lot of people want to learn what to do to make money in the market and I’ve written a plethora of articles on that topic. From trading strategies to money management, to how to perfect your entry into the market, I’ve written extensively about the various aspects of making money trading.

However, what a lot of people need to know is not just good trading offense, but good defense as well. Good defense is much more important for a trader than good offense. I’ve also written about this topic of defense in trading, but not as much as the ‘offense’ of trading. So, today, due to several emails I’ve received over the years, I thought this might be a good topic to help beginning and seasoned traders alike. Let’s discuss what I do to avoid giving back profits and losing money to the market.

  1. Avoid the chop, avoid the whipsaw

The number one thing you can do to avoid losing large sums of money to the market, something that is 100% within your control, is not manifesting trades out of thin air when there simply is nothing to trade.

The longer you look at your chart to try and make sense of it when there simply is nothing to trade, the higher chance you will lose. A good trade should jump out at you without having to stare at the charts for 30 minutes to see it.

If there’s nothing there, don’t trade. Staring won’t help a trade form. If it’s not there, it’s not there. No signal, no trend, just avoid it.

Also, avoid trading choppy markets because it is these market conditions that often cause traders to manifest trades that aren’t there. Good, obvious trades, form in trending markets and (or) from key chart levels, not in sideways chop.

The market is guided by levels and if the market you’re looking at isn’t clearly demonstrating that it’s respecting levels then it may be best to stand aside for a while. If you’re in a friendly market, this will be obvious, if you’re not in a friendly market things will be quite haphazard and choppy. The market will tell you what it’s doing around key levels; breaking, holding, re-testing etc.

If you want to avoid losing your shirt, pants and the whole farm to the market, re-read this section again and follow the wisdom consistently.

The chart below is an example of sideways and very choppy price action that would be better left alone, rather than lose your money trying to trade it:

  1. Don’t risk more than you can mentally afford to lose

Please don’t brush this off as just another cliché statement on money management: Every single person including myself at times, has risked well above their purse limit. Whether it’s adding to a position, risking too much per trade or just being greedy, if you want to survive in the market, you must start thinking about the money as if it’s real and in your hand. You must determine your set amount per trade, your initial trading capital and until you can prove to yourself that you are successful for a period of time, these parameters and dollar amounts should not change under any circumstance.

If you sat down and said your risk per trade is $100, don’t change that until you’ve had a period of success because there’s just no logical mathematical reason to do so. There’s no point in trading if you don’t aim to make at least a 1:1 risk reward per trade or greater (ie: targets need to be wider than stops). You would be surprised how many people don’t even understand that basic concept.

  1. Day-trading fallacy and over-trading.

Another big reason so many traders lose so much money, is that they give in to the allure and temptation of day-trading. What day-trading is, is over-trading. I have written many articles on the perils of over-trading, but since it’s such a big reason traders unnecessarily lose money in the market, it’s important to discuss it again…

I believe in and teach a low-frequency trading approach. You must let your trades play out without interfering, because trades often take longer than expected to play out. Markets will often go further than we think, and the only way to get on-board big moves in the market (which is what makes you a lot of money), is by being patient and leaving your trades alone.

The only real chance a smaller retail trader has (like you), is patiently waiting for obvious trades to set up and then taking a decent size position that you hold for a period of days or even weeks. Trying to day-trading, dodging in and out of the market multiple times a day, is a fool’s game that will leave you frustrated, angry and broke.

  1. Develop and maintain the proper trading mindset

The proper trading mindset is one of neutrality. You must not become attached to any trade or position you enter. You must TRULY not care if a trade wins or loses. Once you start caring, you start getting emotional and that leads to trading mistakes like over-trading or risking too much.

Money management has the biggest effect on your emotions. What I mean is, managing your risk is the most powerful tool that you can use to make sure you remain neutral. You must determine what your dollar amount is that you can risk and be mentally OK with losing. If you get attached to a loss or win, trading will become an extremely difficult game where you feel like you’re constantly losing. Trading is essentially a game of math, by that I mean, risk reward; making sure your wins are greater than your losses. For the most part, if you apply logical entries, proper mathematics (risk management) and a neutral mindset, you do stand a chance in the competitive sport we call market speculation.

PLEASE LEAVE A COMMENT BELOW – I WOULD LIKE TO HEAR YOUR FEEDBACK :)

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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 20,000+ students since 2008. Checkout Nial's Professional Forex Course here.
  1. Minani August 19, 2017 at 11:19 am

    Greetings !

    I’m very happy for this lesson but I have a question: I’m in Uganda in East Africa I had a chance to know about forex trading. so how can I do for growing my plan after my registration as trader member? Thank you so much

    Reply
  2. olwethu July 25, 2017 at 7:24 am

    thanks man. the world needs more people like you.

    Reply
  3. Sanele July 1, 2017 at 7:48 pm

    Clearly explained by trader who set his mind to trading….. thank you

    Reply
  4. Anthony June 20, 2017 at 6:50 pm

    These words are TRUTH, thank you.

    Reply
  5. Rahmat May 11, 2017 at 12:45 am

    We need more lessons for defensive trading advice like this. Thanks Nial for great article.

    Reply
  6. Olatunde Ademola April 29, 2017 at 4:43 pm

    I just understand “not to truly care about the outcome of one trade”. One basic reason new traders do well with demo account and poorly when trading live.
    Thanks Nial.

    Reply
    • tuy sokha May 4, 2017 at 11:37 am

      Agree

      Reply
  7. Adrian March 13, 2017 at 8:29 am

    Nice article and very usefull.

    Reply
  8. Praise February 22, 2017 at 3:56 am

    Thanks Boss

    Reply
  9. Sthembiso February 21, 2017 at 4:54 pm

    Important points indeed.

    Reply
  10. khesiwe February 19, 2017 at 8:28 am

    Great article Nail thanks

    Reply
  11. Paul Gukiina February 18, 2017 at 12:12 am

    Thank you the new release. I can’t find the fancy words to use but in short thank you very much for your mentor ship in my trading career. May i ask one question. When drawing the levels which time frame is better if I am trading on a daily chart. Is it the weekly or monthly or just the daily ones only.
    Will be grateful for the prompt reply . Thank you so much my teacher and mentor.

    Reply
    • Nial Fuller March 4, 2017 at 6:50 pm

      We can draw levels on weekly and daily chart.

      Reply
  12. Mavrick February 17, 2017 at 12:02 pm

    Thanks Nial, very good points and very well explained.

    Reply
  13. PERI February 16, 2017 at 1:36 pm

    Really, an OUTSTANDING ARTICLE for reaching SUCCESS TRADING !
    Regards,

    Reply
  14. MEHDI February 16, 2017 at 5:57 am

    Hi Hail. thanks a lot for this smart and profitable article.never seen yet.
    No Trading Strategies Doesn’t Work If Doesn’t Choose the Right Living Strategy.the right lifestyle.It would be nice to write an article about life style if you have free time.
    thanks again.

    Reply
  15. nwosu isaac February 16, 2017 at 3:42 am

    honestly, with your analysis my trade has improved positively more grease to your elbow nial.fuller

    Reply
  16. Mangut K. Mafwalal February 15, 2017 at 11:11 pm

    Nial, you are indeed a good FOREX mentor. Great article that can improve FX trading. Thanks and God bless u more.

    Reply
  17. adekunle February 15, 2017 at 6:55 pm

    Honestly speaking…. All this article have influenced my trading
    I almost quit trading but God has placed all this aticules to help me Going. Thank you boss
    I pray God bless me to start the learning course

    Reply
  18. Erik February 15, 2017 at 1:08 pm

    Thanks Nial….The mindset info really helped.

    Reply
    • Martha February 15, 2017 at 9:34 pm

      That is very true. I have learned from my mistakes.

      Reply
  19. Andrew February 15, 2017 at 5:40 am

    Great advice. Your articles are really helpful

    Reply
  20. EMMANUEL TEKE February 14, 2017 at 9:55 pm

    Your articles have been very informative to me. i have read a lot of literature on forex trading and sometimes it is confusing because there is so much to read.
    What is the first thing to do by a beginner of forex trading.

    Reply
  21. Abraham February 14, 2017 at 8:06 pm

    Thanks Nail for your excellency information

    Reply
  22. PhillipJ February 14, 2017 at 6:26 pm

    Thank you so much

    Reply
  23. ANTANAS February 14, 2017 at 10:16 am

    Hi thenks for another good article just wery interest hou many traides you take per week or month what is you awaradge i personaly take on but good traid setup per week.

    Reply
    • Nial Fuller February 14, 2017 at 10:50 am

      I trade around 6 to 10 times per month.

      Reply
  24. khismusi Sibandze February 14, 2017 at 4:11 am

    Blowing your account is not exciting but I have learn my lesson well, keep up with the good articles

    Reply
  25. Richard February 14, 2017 at 4:03 am

    Nial,

    This nugget should be sent everyday for six months, for myself PLEASE send it every hour!!!!!!!!

    As usual your tips and insights are priceless.

    Regards,
    Richard

    Reply
  26. Leroy February 14, 2017 at 3:06 am

    Thanks Nial for another brilliant article- simple but brilliant. I have been following your articles and strategies for quite sometime now and find them instructive and innovative. I have benefited enormously from them and constantly look forward to receiving them. Thanks again and in closing I must commend you on your generousity of spirit, bless you.

    Reply
  27. OLATUNJI IBRAHIM February 14, 2017 at 2:30 am

    nial this is the best article I have read so far in 2017, I had been telling my student to trade the best trade and the best trade won’t come everyday.

    Reply
  28. David Kelly February 14, 2017 at 2:11 am

    Hey, Nial…Great article. When my trading starts to get out of control your advice grounds me. I have a hard time “letting the market come to me”. The best way I have found to do this is to have a two sided decision board with “reasons for” on one side and “reasons against” on the other. I have noticed that the times that the “reasons against” side is empty is when the market coming to me and the more even the two sides are is me forcing a trade. Sounds obvious in the calm of hindsight but in the pressure of a possible signal it tells me much. Your advice has helped me to see that and is a definite factor in my trading. Thank you!

    Reply
  29. Akhtar February 14, 2017 at 2:00 am

    Hi, Dear Niel,
    Extra-ordinary, well-briefed, hammering the beginners to learn properly for gaining some income.Sniper and crocodile have always hedge. Thanks. and best of luck.

    Reply
  30. Geoffrey February 13, 2017 at 11:43 pm

    You are the best teacher in this business. I have been following your articles and have read almost everyone of them and I can say that you have helped me build a trading confidence. I had previously blown two accounts but after reading your articles, I have finally broken even by doubling my account. Thank You Nial.

    Reply
  31. D. Greene February 13, 2017 at 10:21 pm

    I close trades too quickly. I think I should use longer time frames and let my trades run.

    Reply
  32. John February 13, 2017 at 9:25 pm

    Great article Nial. I am realizing that trading is like most things in life that are worth while.don’t take the first thing that comes along,there is too many better opportunities to choose from. Be patient and let nature work for you.Like you have said; Let the trade pop out at you screaming to be traded! Thank you for your instruction.

    Reply
  33. Felix February 13, 2017 at 6:51 pm

    Hi Nial
    Thanks for the article, if there is one thing learning from you have taught me is to be in game for as long as possible by not blowing up my trading account. I have been in for probably a few years though not making too much but definitely not blowing up my trading account. The advice to everyone both beginners and seasoned traders is to find something to keep you distracted from the addiction of wanting to be be in the trade at all times.
    Thanks Nial once again…. You have been a blessing to everyone who comes across you.

    Reply
  34. Jet Toyco February 13, 2017 at 3:00 pm

    This article is priceless! Thank you for the great information, trading is a sport and needs dedication and time!

    Reply
  35. Paul February 12, 2017 at 11:44 pm

    Hial, always on point. Now am getting courage and confidence that your course good to take. Thank you

    Reply
  36. Agung Kurniawan February 12, 2017 at 11:03 pm

    nice articles,
    how many trade per week do you take?

    Reply
  37. Ivane Zurabishvili February 11, 2017 at 9:01 pm

    Hi Nial, write same articles often, traders need to it

    Reply
  38. Said Alwashahi February 11, 2017 at 6:17 pm

    Thanks Nial
    great advice I like it

    Reply
  39. Adrian F February 11, 2017 at 5:12 pm

    Hey Nial,

    Does neutrality towards a given trade’s outcome get easier over time and experience, or is it something that a person has or needs to develop?
    I ask because, whilst only brief, I do shake my head in frustration when I lose a trade. but I shake it off and keep learning.
    is this what you mean? because I imagine it would be difficult having a complete disconnection.

    Reply
  40. Thanh Luyen Le February 11, 2017 at 2:38 pm

    Thanh you

    Reply
  41. José February 11, 2017 at 10:10 am

    Excellent information. Thank you
    i really appreciated!!!

    Reply
  42. Lufuno mavhungu February 11, 2017 at 9:59 am

    I trade like Nial Fuller

    Reply
  43. Caramia1 February 11, 2017 at 7:51 am

    Yes you are 100% correct – thanks for this. Big lesson to take away from this is to STOP INTERFERING and let things run their course. If you took the trade BELIEVE in it and WAIT! Patience is a virtue as mother always said😊

    Reply
  44. Thendo February 11, 2017 at 6:27 am

    To the point as always

    Reply
  45. richadi36 February 11, 2017 at 1:11 am

    Another nice article, Nial. Thanks a lot for sharing your insights as a professional trader. Issues like money management, proper trading mindset and overtrading are main mistakes that amateurs make at the beginning of their journey…

    Reply
  46. Essam Eldin Abu Baker February 10, 2017 at 11:40 pm

    Good as usual. I need help from you please. I wonder if you have any simple trading strategy to use it in the forex market.

    Reply
  47. KRISTOFA OKENTA February 10, 2017 at 10:56 pm

    Your articles comes clearer than the morning sun. It is only our trading ‘cloud’
    seems to hide the reasons why we are not succeeding in the market.
    Thanks for your efforts to teach us.

    Reply

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