Tip #18   Cut your losses early on

A vital forex tip! Capital preservation is of paramount importance in forex trading because of the huge leverage traders use. If you do not abide by this rule, you will probably not become a consistently profitable forex trader. If you’ve already traded forex unsuccessfully, chances are this is your biggest mistake. Please take a look at your trading history and notice whether you lost more pips for your average losing trade than you made for your average winning trade. If that’s the case, what use is it to have a 70% winning rate? Winning 7 out of 10 trades sounds like a great score until you notice that the 3 times you lost cost you more pips than the gains of the 7 trades combined!

Also, if you have a losing streak of 2 or 3 trades in a row, take a couple of days off the charts. A losing streak can grow into an abysmal whirlpool sucking most or all of your money in. Don’t rack up your brains too much. Cut your losses, take a rest and come back in a few days with a clear mind to sort things out.

“When the market goes against you, you hope that every day will be the last day – and you lose more than you should had you not listened to hope. And when the market goes your way, you become fearful that the next day will take away your profit and you get out – too soon. The successful trader has to fight these two deep-seated instincts.” Jesse Livermore, legendary stock market trader