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Nial Fuller

NIAL FULLER
Professional Trader, Author & Trading Coach

How to Stop Losing Your Money in Forex Trading

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By in Forex Trading Articles Last updated on | 39 Comments

mindIf you are currently on a losing streak in the markets, today’s Forex trading lesson is for you. All of us experience losing trades, it’s just part of being a trader, but if you are finding that you’re losing more money than your making and you don’t know how to stop it, you probably have some bigger issues that you need to face and fix before you can stop the bleeding. I am going to give you a two-part program in today’s article that will hopefully provide you with the insight you need to stop losing more money than you are making in the markets.

Part one: Master your mind

The main reason why most Forex traders lose money, is because instead of consciously controlling their emotions in the market by preempting all aspects of their trading, they get caught up in a game of emotional trading, mostly because emotional trading is easier to do and offers more “excitement” than disciplined, controlled trading.

The Forex market essentially offers traders two options:

1) Gamble your money away in an up and down emotional roller-coaster of trading.

2) Learn to master your mind by becoming a disciplined trader and make slow but consistent money over time.

I will assume that your aim and goal is to become a disciplined trader so that you can foster the proper trading mindset in order to not gamble away all your money in the markets like so many traders do. Let’s take a look at the two primary aspects of mastering your Forex trading mindset:

• Understand and implement proper Forex money management to attain mastery of your mind

If you want to attain the proper Forex trading mindset and really master your own emotions when interacting with the markets, you will first need to understand and implement proper forex money management. The reason why so many traders become emotional when they trade is usually because they are either risking too much money or trading too frequently.

When you risk too much money per trade, you inherently place greater meaning on each trade, since you have more to lose; this naturally causes you to become more worried about the trade and more emotional in general. Once you induce this type of emotional trading, it works to feed on itself and cause more emotional trading. When you lose on a trade you’ve risked too much money on, you put yourself in a very vulnerable position to continue the cycle because you will feel great frustration and anger over the amount of money you just lost, and this will work to fuel your desire to continue risking too much in order to try and make back the money you just lost. If you want to avoid this type of emotional trading, you must learn to become a disciplined forex trader.

Another way traders mismanage their trading account money is by trading too frequently. Many of my students are surprised when I tell them that I only enter one trade a week on average. Some weeks I might trade two or three times, some weeks not at all. The point is that most traders trade way too much and most traders also lose money over the long-term, I don’t think this is just a coincidence.

When you find yourself over trading, what you are really doing is acting emotionally and gambling. Thus, in order to stop over trading in Forex, you have to learn to control your emotions by having a detailed Forex risk management plan that also includes specifics on how you can avoid over trading. Perhaps the best way to avoid over trading is to know exactly what you are looking for in the market and always take some time off from the markets after every trade, whether it’s a winner or a loser. You should have all of your trading strategies detailed in your forex trading plan, this way you never take a trade that is not up to the standards you’ve detailed beforehand.

• Design and use a Forex trading plan and Forex trading journal to maintain mastery of your mind

In the previous section we discussed how understanding and implementing proper money management is necessary to attain mastery of your mind. Now let’s talk a little about how to maintain this mastery once you’ve attainted it.

The two main “tools of the trade” for maintaining mastery of your mind as you trade the markets, are Forex trading plans and Forex trading journals. As we discussed previously, having a Forex trading plan that details all of your trading strategies and setups is crucial for navigating the market in an objective and logical manner; so that you don’t enter trades for no real reason and so that you stay true to the concepts you mastered in your trading strategy.

The other main tool of maintaining the proper Forex trading mindset is the trading journal. It’s necessary to track all of your trades so that you develop a track record that reflects your ability to remain disciplined and also to create something that gives you accountability. By creating a track record that reflects all of your trading activity, you will have a tangible piece of evidence that will directly reflect your ability to trade properly. If you diligently update and use your forex trading journal, you will see for yourself whether or not you are maintaining your discipline, and if you are trading in a disciplined manner you will not want to “mess up” your track record of disciplined trading reflected in your journal by trading emotionally. Most traders simply do not feel they need to create a trading track record or a trading plan, most traders also lose money in the markets, again, I don’t think this is a coincidence.

Part two: Master your Forex trading strategy

Bruce-LeeThe next thing you must do to stop losing your money in the Forex markets is to truly master your Forex trading strategy. I find that a lot of traders are simply “running and gunning” and don’t really know what they are looking for in the markets, this induces emotional trading because you end up “shooting” at anything that moves instead of “sniping”, in essence, if you haven’t truly mastered your trading strategy, you are likely going to over-trade.

• Master one strategy at a time

The first step to truly mastering any trading strategy is to master one aspect of it at a time. I teach traders who learn my price action trading strategies to master one price action setup at a time before moving on to another, this way they become fully proficient in each setup before they attempt to load their brain with more information, this “specialization” allows for a deeper understanding of each price action trading strategy I teach. When you think about a specialist in any field, they are usually the people making the most money in life. Thus, I highly recommend you master one Forex trading strategy at a time in order to become a “specialist” of each.

• Trade Forex like a sniper

Next, after you have fully mastered an effective trading strategy like price action, it’s time to implement it. Unfortunately, many traders fail at this aspect even after mastering their strategy because they don’t have the patience to trade like a sniper. You must learn to pick and choose your entries wisely and not trade too frequently; this is what I call trading Forex like a sniper and not a machine gunner. Most traders trade like machine gunners and very quickly run out of “ammo” (money). If you want to make your bullets count and achieve your goal of making money over the long-term, you will need to conserve your ammo and only fire at the high-probability trade setups that you have mastered and subsequently detailed in your Forex trading plan.

• Focus your trading efforts on the daily charts

Finally, the last tip I have for you to stop losing your money is that less is more in Forex. In every regard, trading less is almost always better than trading more. The market is not going away, don’t freak out if you miss a good setup, it’s a marathon, not a sprint. You need to learn to trade the daily charts first and truly accept the fact that lower time frames are inherently lower probability and contain more random price movement “noise” than their clearer higher time-frame counter-parts. Most traders erroneously believe early on in their trading careers that they will find more opportunities on the lower time frames, while they may “think” they are finding more opportunities, all they are really doing is trading lower-probability trade setups and inducing over-trading by looking at the charts too often.

Perhaps the best thing you can do right now to stop losing your money is to focus all your analysis efforts on the daily charts and go back to demo trading until you have truly mastered an effective trading strategy like price action. If you want to know more about mastering price action trading and focusing your efforts on the daily charts, check out my price action Forex trading course and members’ community.

Nial Fuller is considered a leading ‘Authority’ on Price Action Forex trading strategies. If you want to learn more about harnessing the power and simplicity of Price Action Trading Strategies please visit Nial Fuller’s Forex Trading Course & Traders Community Page Here. Nial’s Students get lifetime access to all of his advanced price action Forex Courses, video lessons, webinar tutorials, daily trade setups newsletter, live trade setups discussion forum, traders support line & free ongoing course updates. For more information visit the Forex Course page here.

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. KRISTOFA OKENTA October 20, 2011 at 7:21 pm

    Dear Nial, you have taken another good effort to give us a beacon of direction in trading.
    Thanks a lot.
    I am now a happy,confident and comfortable trader since I came to know your LTTTM than I have been in the past two years.
    I owe you all my success.

    Reply
  2. Nemanja October 11, 2011 at 8:21 pm

    I like selection of images in this article !

    Best Regards !

    Reply
  3. kotijett October 11, 2011 at 2:24 pm

    Thanks Nial. This week being a full moon cycle “less is more”. So my trading is the same. Thanks for sharing this weeks article. As always your lessons continue to inspire me as a trader.

    Reply
  4. maviiri godfrey October 10, 2011 at 9:52 pm

    Positons indeed should be calculated in forex. the best strategy here is price action.

    Reply
  5. rundhir October 10, 2011 at 7:20 pm

    Nial

    This article could not be more true.
    Brilliant

    Reply
  6. andrew October 10, 2011 at 9:24 am

    thanks for article. cheers andrew.

    Reply
  7. eric October 10, 2011 at 12:19 am

    thanks a lot nial, for every article you write has helped me in improving my trading ways, and make significant changes

    Reply
  8. phil preston October 9, 2011 at 11:33 pm

    Hi Nial
    Your Trading videos are AWESOME!! You have a simple – yet effective way of explaining Price action, that makes complete sense. New Traders, seem to complicate Trading FAR TOO MUCH. I was told by a very sucessful Trader ( like yourself) trading Sucessfully is Fundementally understanding Support and Resistance points and Most importantly having sound money management principles in place, before entering a Trade. I don’t think it’s a coincidence, that you advocate similar traits.
    Thanks to your Video’s Nial, my Mental approach to Trading has improved immensley.
    Phil Preston

    Reply
  9. Steve October 9, 2011 at 8:51 pm

    Absolutely True, every word!

    I have just reviewed my Trading Journal of the last 10 trades over two months. What a sobering experience to go back with no emotion and look at what I had traded.

    I will read this article again just to hammer into my brain what I must do.

    Thanks Nial

    Reply
  10. BV October 9, 2011 at 6:56 am

    Amazing Article!

    Reply
  11. fadi October 9, 2011 at 4:22 am

    i want to be one of your student cause your price action isvery intersted and more logic at least to me cause so many robot i trade but never work as your price action and loose so much before .now i want to try your ways in trading
    please advice
    thanks

    Reply
  12. chris October 8, 2011 at 10:26 pm

    spot on. When i panic that i am not in the market i go to the lower time frames. with a 100 losing ratio.

    this article is on my wall.

    Reply
  13. OKOLI CHUKWUNONSO October 8, 2011 at 9:08 pm

    Thanks Nial! Honestly, i’ve been keeping this to myself but today i was poised to voice it out….since i was introduced to LTTTM 4months ago, i double my account every 2 weeks just by taking ‘high probability’ trade set-ups on 4hour time frame. hope to join your course soon……cheers!

    Reply
  14. samm October 8, 2011 at 5:22 pm

    Its another Great article That says it all.Thanks very much
    Sir Nial.

    Reply
  15. Colin October 8, 2011 at 2:27 pm

    Hi Nial great lesson.I am slowly trading like a sniper. Had 12 wins 2 B/E & 2 loses.I find Demo OK But trading live is much better. I need to feel the pain of losing with real money.I just trade micros at the moment, as time goes on & I improve I will move to minies then one day standard contracts. This seems to work for me.Great work Nial

    Reply
  16. Poda October 8, 2011 at 2:08 pm

    Your have a tremendous understanding of forex and you are being able to transfer it…. hopefully i can put it in practice. Thanks mate

    Reply
  17. John Lavi October 8, 2011 at 1:10 pm

    good staff!!

    Reply
  18. Greg October 8, 2011 at 10:30 am

    Thanks buddy. The ‘sniper’ analogy is a great way for me to remember.

    All the best, Greg.

    Reply
  19. Bruce October 8, 2011 at 6:08 am

    Thanks, Nial.

    Reply
  20. Gurpal October 8, 2011 at 2:40 am

    Hi Nial,

    Hope you are well. Thank you for another fantastic article and for sharing your superb insight.

    Thank you for all your help

    Thanks and Regards

    Gurpal

    Reply
  21. Mithun October 8, 2011 at 2:12 am

    Thank you Master !!

    Reply
  22. Robert October 8, 2011 at 1:51 am

    Great summary of your previous articles and written straight to the point like a sniper. One of the best educational sources I’ve found so far.

    Reply
  23. Mahdi October 8, 2011 at 1:38 am

    nice written article with wise thoughts

    thanks

    Reply
  24. akshaya kumar dash October 8, 2011 at 1:27 am

    very excellent for all trder

    Reply
  25. Barry Hayes October 8, 2011 at 1:06 am

    Hi Nial

    I ve been trading 15 min charts, with good success, I also check 4 h & daily for FIB Levels.

    In my trading I use fib levels, locating head & shoulders formation, double bottoms, swing lows & highs, bullish & bearish candles set-ups.

    Great Article as always

    Happy Trading !

    Reply
  26. George October 7, 2011 at 10:53 pm

    “Sniper” I like that Nial, its so true “wait” “aim” “fire”.

    Cheers

    Reply
  27. T Allen October 7, 2011 at 10:52 pm

    Very well written Nial. Thanks for your diligent efforts to educate all of us.

    Reply
  28. Shams October 7, 2011 at 10:16 pm

    very good article at the best possible time. A true eye-opener!! back to sniper mode :)

    Reply
  29. Filopastry October 7, 2011 at 9:44 pm

    I love the psychology aspect of trading.
    Nial you have an amazing insight into the mind of novice traders.
    Your support is invaluable,
    Thamks Nial
    Filopastry

    Reply
  30. Ben October 7, 2011 at 9:21 pm

    Great article, however my experience is that you can trade more often and profitably on shorter time frames. This allows for a laser like, sniper entry, therefore larger position sizes resulting in much bigger profits. Ofcourse I will refer to the daily chart to get the trend.

    Reply
  31. Lionell Dixon October 7, 2011 at 9:15 pm

    Thanks Nial. I really needed this as a refresher for this week.

    Reply
  32. Ramli October 7, 2011 at 8:52 pm

    Thanks Nial.

    Great advice.

    Need to remind many time.

    Thanks

    Cheers

    Reply
  33. Ex-gambler October 7, 2011 at 8:34 pm

    My trades go wrong when I don’t draw every possible trendline & support & resistence line so as to know where price could bounce up or down.

    Reply
  34. Anton October 7, 2011 at 8:06 pm

    Hi Nial, running and gunning was my former strategy and bad habit last year , trading without plan and journal , of course constant loosing of money and I must say is not easy to change it. After reading your trading course I found out Im becoming more gambler then trader.
    Thanks for your another valuable article – it really helps to change my mindset and find a different view on profitable trading.

    Reply
  35. Abel October 7, 2011 at 7:35 pm

    Hi Nial,

    This is a brilliant article which will benefit anyone seriously learning to trade Forex.
    Good on you Nial, keep the good work up!

    I am one of your many students and I am more than twice your age!
    Who said age matters?

    Reply
  36. Anthony uche October 7, 2011 at 7:32 pm

    Thanks Nial ! what more can i say? you have really helped me to improve my tradings, thank you for your priceless price action knowledge.IT WORKS.

    Reply
  37. Paul October 7, 2011 at 6:43 pm

    Hey Nial,
    there is one problem with demo trading. It lacks the psychologigal factor, which for me is very important to make the trading closer to reality. How about a mini account – little many, but real money. I do so, I trade 0.01 lot and it works for me.

    Thanks and regards

    Paul

    Reply
  38. John October 7, 2011 at 6:37 pm

    Nial
    Another fantastic article. I joined a couple of months ago and have learned more in two months than the previous 4 years trading. Worth every cent.
    Keep it up!

    Reply
  39. Sanjay October 7, 2011 at 6:26 pm

    Right on the button.

    I like how you defined “sniper”: I find that a lot of traders are simply “running and gunning” and don’t really know what they are looking for in the markets, this induces emotional trading because you end up “shooting” at anything that moves instead of “sniping”, in essence, if you haven’t truly mastered your trading strategy, you are likely going to over-trade.

    So true.

    Reply

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