Blowing accounts trading forex is a common thing every new trader do. I’ve done that too. But in this article I will tell you a way to survive without blowing an account even with the worst trades. You have no idea how easy it is to not blow an account.
Accept the facts
You can make a lot of money trading forex. You can triple your account in a week. But guess what? You can also lose a lot of money trading forex. So understand that. Maybe not all of you are into artificial intelligence and shit like that, but how does an AI come and beat all the human pro players in a video game? By learning the mistakes it makes!
Learning from mistakes
The longer you survive, the more mistakes you are going to make and the more you are going to learn. If you can do it without blowing an account in one whole year just imagine how experienced you will become. Assuming you follow a set of rules and actually have a trading plan.
$1000 x 5% = $50 || Risk this much when account grows over 10%
$1000 x 2% = $20 || Risk this much when account grows over 5%
$1000 x 1% = $10 || Risk this much when account grows over 2%
$1000 x 0.5% = $5 || Risk this much when account is less than +2% growth
Just some random numbers to refer back to.
You start with 0.5% risk per trade.
So everyday you lose maximum 2.5%
How many days will you survive? since we are risking in & based on balance as the balance goes down so does our risk in money.
Assuming every month has 20 trading days and every year has 240 trading days – we can survive 240 losing trades in a row and still not blow our account. ($300 remaining)
If you keep at it doing this with discipline you will somewhere along the journey have some winning periods as you are constantly improving yourself. Even by blowing accounts a person with a plan improves himself, but with this systematic approach you do not blow a lot of accounts.
And as your account grows to 2% growth you increase your risk to 1%
As it grows into 5% growth increase the risk to 2% and when it does that final 10% growth keep the risk in between 5% and 2% risk. and as your account balance decreases in growth decrease it back accordingly as well. Take control of the losing periods and you will make it one day. Trust this process. $1000 per year is better than blowing $1000 per month. Survival is the priority until you “Turn the corner”.