Why Am I Blowing Every Forex Account I’m Funding? What Am I Doing Wrong?
- Hammet Forex
- Oct 15, 2024
- 7 min read
Updated: Oct 19, 2024
If you've ever wondered, “Why am I blowing every forex account I’m funding?” you're not alone. Forex trading can feel like an unforgiving beast, especially when you're staring at yet another red screen after what seemed like a perfect setup. You’ve followed your trading plan. You’ve set your stop losses. You even took risk management to heart (you’re risking only 1-2% per trade like the experts said), but… you’re still blowing accounts. If that’s not frustrating, I don’t know what is.
Before you throw your keyboard across the room or consider quitting forex altogether, take a deep breath. Let’s dive into why this might be happening, what you could be doing wrong, and most importantly, how to stop blowing accounts.
Chapter 1: You’re Not Alone - Why Forex Accounts Go Bust So Often
Confession time: If you’ve blown one or more forex accounts, congratulations—you’re officially a member of the club. Almost every trader has blown an account at some point (yes, even the gurus you follow on social media who seem to print money).
The truth is, forex is hard. Like, trying-to-solve-Rubik’s-cube-blindfolded kind of hard. The market moves fast, and it’s affected by thousands of different factors like economic data, geopolitical events, and even rumors. One minute, you're up, and the next minute you're wondering why your once-promising trade has turned into an account-draining monster.
But why does it seem like it happens more often to you?
Chapter 2: The Ugly Truth: What Are You Doing Wrong?
Let’s get straight to the point. Here’s a list of what might be going wrong with your trades, even if you’re following your plan and risk management rules:
1. Your Trading Plan Isn’t as Solid as You Think
There’s a saying: “If you fail to plan, you plan to fail.” But what if you do have a plan, and you’re still failing? The issue might be that your plan isn’t as effective as you think. A good trading plan isn’t just about entry and exit points—it needs to adapt to different market conditions.
Is your plan working in all market conditions? If your plan only works in trending markets and you’re trading in a choppy, sideways market, you’re going to struggle.
2. Your Risk Management Is Off
Wait, before you say, “I’m only risking 1-2% per trade, I’m doing it right,” let’s dig deeper. Even if you’re following the golden rule of risk management, there could still be a flaw in how you’re calculating risk.
Position Sizing: Are you sure you’re sizing your positions correctly? If you’re not factoring in things like volatility or the average true range (ATR) of the pair you’re trading, you could be taking on more risk than you think.
Stop Loss Placement: Are you placing your stops too tight? In volatile markets, stops that are too close can get triggered prematurely. Give your trades some breathing room.
3. You’re Over-Trading
Maybe your problem isn’t one or two bad trades—it’s the fact that you’re taking too many trades. If you’re constantly jumping into the market, trying to catch every little move, you’re bound to get burned. Less is more, and in forex trading, patience often wins over activity.
4. You’re Trading Emotionally
How many times have you entered a trade based on fear of missing out (FOMO)? Or revenge traded after losing a position? These emotional triggers are silent account killers. No amount of technical analysis can save you if you’re emotionally attached to every trade.
5. You’re Trading the Wrong Timeframes
Let’s be real—trading shorter timeframes like the 1-minute or 5-minute charts can feel like driving a racecar at 300 mph with no brakes. You’re reacting instead of planning. If you’re constantly in and out of trades, you might be getting chopped up by noise.
Consider stepping back and trading longer timeframes. The higher the timeframe, the more reliable the signals tend to be. Yes, you might not have as much action, but action is overrated when you’re blowing accounts.
6. You’re Not Accounting for Market Conditions
Every forex pair behaves differently, and market conditions change all the time. What worked in a low-volatility environment won’t necessarily work when markets are turbulent. Are you adapting your strategy for different conditions, or are you trading the same way every time?
Chapter 3: Dealing with Blowing Accounts - How to Stop the Cycle
Okay, so now that we’ve identified some reasons why you might be blowing accounts, let’s talk about what to do when it happens (besides screaming into a pillow, of course).
1. Take a Break
Yes, I know this sounds counterintuitive. But the worst thing you can do after blowing an account is to jump right back into the market. If you’re in a mentally or emotionally distressed state, you’re more likely to make impulsive, irrational decisions.
Step away from the charts for a while. Go outside. Get some fresh air. When you come back, you’ll have a clearer head and a fresh perspective.
2. Analyze Your Trades
No, don’t just analyze the one trade that blew your account. Go back and look at your last 20 or 50 trades. What patterns do you see? Where did things start to go wrong? Did you stick to your plan, or did you deviate? Understanding the mistakes you’re making repeatedly will help you stop the cycle of account destruction.
3. Lower Your Risk Even Further
If you’re still blowing accounts, even with “proper” risk management, maybe it’s time to dial it down even more. Try risking less than 1% of your account on each trade. This may feel like crawling when you want to run, but it will give you room to survive the inevitable string of losses without wiping out your account.
4. Paper Trade
You might hate hearing this, but paper trading (trading with a demo account) can be a lifesaver. It lets you refine your strategy without risking real money. Yes, it’s not as exciting as the real thing, but blowing demo money is way less painful than blowing your hard-earned cash.
5. Seek Mentorship or Join a Community
No one succeeds alone. Consider joining a trading community or seeking mentorship from more experienced traders. Sometimes an outsider’s perspective can spot flaws in your strategy that you may have missed.
Chapter 4: How to Stop Blowing Accounts for Good
Now, let’s get into the nitty-gritty of how to stop blowing accounts once and for all. You’re here because you want actionable solutions, so here we go:
1. Refine Your Trading Plan
I know you have a trading plan. But is it really that good? A solid trading plan should:
Define your entry and exit rules clearly (there should be no guesswork).
Be tested over a significant period of time and different market conditions.
Include risk management rules beyond just “1-2% risk.” How are you calculating position size? How are you managing volatility?
Pro Tip: Try backtesting your plan on historical data. If it doesn’t work on past data, it’s unlikely to work moving forward.
2. Learn to Love Risk Management
This is a hard pill to swallow, but you have to be okay with losing. Risk management isn’t about never losing—it’s about limiting the size of your losses so that when a winning streak comes, you’re still in the game.
Rethink Your Stops: Instead of using arbitrary numbers, consider using technical levels (like support/resistance) for stop placement.
Be Conservative: If you’re in a losing streak, cut your risk further. Don’t try to “win it all back” with one trade—that’s how you blow accounts.
3. Trade with the Trend
You’ve heard it before, and I’ll say it again: The trend is your friend. Trying to fight the trend is like swimming upstream—it’s exhausting and usually futile. Stick to trading in the direction of the market, and you’ll increase your odds of success.
4. Journal Your Trades
I can’t stress this enough—if you’re not journaling your trades, you’re missing out on a goldmine of data. By writing down your thoughts before and after each trade, you’ll start to see patterns (both good and bad). Are you entering trades too early? Are you consistently getting stopped out by tiny retracements? Journaling can reveal these habits.
5. Embrace the Psychology of Trading
The technical side of forex trading is just one piece of the puzzle. The psychological aspect is equally, if not more, important. Emotional discipline separates successful traders from the rest.
Don’t Chase: If you’ve missed a trade, let it go. The market isn’t going anywhere.
Don’t Get Greedy: Set realistic profit targets and stick to them.
Accept Losses: Losses are part of the game. Don’t take them personally, and certainly don’t let them dictate your next trade.
6. Automate Your Trading (If Possible)
If you find that emotions are messing with your trades, consider automating your strategy. There are plenty of tools that allow you to execute trades based on predefined criteria, removing the emotional component entirely.
Chapter 5: Should You Quit Forex Trading?
Ah, the big question: Should you quit?
Here’s the thing—blowing accounts doesn’t mean you’re a bad trader. It just means you haven’t found the right combination of strategy, discipline, and risk management yet. Many successful traders have stories of blowing multiple accounts before they finally got it right.
If forex trading is causing you too much stress, sleepless nights, or financial hardship, it might be worth taking a break. But quitting altogether? That’s a personal decision. Just know that every great trader has been in your shoes.
Turning Red Screens into Green Ones
Blowing accounts is painful, no doubt about it. But it’s not the end of your forex journey unless you let it be. By understanding what’s going wrong, refining your strategy, and honing your psychological game, you can stop the bleeding and turn things around.
So, next time you fund a new account, instead of thinking, "Here we go again," walk in with confidence, knowing that this time, you’ve got the tools to turn those red screens into green ones.
Until then, take it easy on your mouse (no need to throw it after every loss), stay disciplined, and remember—every blown account is just one step closer to mastering the market.
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