“Why do I keep losing money trading?” It’s a question every trader has asked at some point. Hitting a losing streak is not only normal — it’s something all traders encounter on their journey. While it can feel discouraging, it’s also a valuable opportunity to readjust and strengthen your trading strategy. In this article, we’ll explore practical steps that may help you stop losing money trading and get back on the path to success in trading.
1. Take a break
If you have lost several trades in a row, it may be a good idea to take a break, at least temporarily. It sounds obvious and harsh, but it is true. Yes, losing is a natural part of trading, and there will always be unprofitable deals because there is no secret trick to 100% profitability. But if you are constantly losing money, and you catch yourself revenge trading, put an end to it by taking a breather.
Going on a walk, making a cup of coffee, or even doing the dishes are all great distractions that you can occupy yourself with. Take this time to think about something different and return to trading later. Don’t push yourself to trade more if you can feel that it’s only making things worse.
2. Assess your emotions
Strong emotions, both positive and negative, are dangerous for trading. They make you act irrationally, and that can be the cause of a losing streak. Taking control of your emotions is not easy, but it has to be done. To help yourself avoid emotional decisions, make sure to stick to your trading plan and keep a journal. These tools can help you analyse your behaviour and understand how it affects your performance. Committing to your plan and ensuring self-discipline are keys for improvement.
3. Mind the risk
Traders often struggle to break a losing streak because they forget about risk management or dismiss it completely. Why is it a bad idea to bet all of your funds on a single deal? Because even if you manage to benefit once or twice, in the end, an unprofitable deal will wipe your balance out. This is why it is crucial that you apply key risk-management tools, such as the 2% rule and Stop Loss feature. Managing potential risks is more efficient than trying to regain the funds after the loss already happened.
4. Set yourself up for success
A losing streak might be the result of self-sabotage. Make sure that when you trade, you have the time and the energy to concentrate and follow your plan. Think your trading through beforehand, arranging your trading session in a positive and productive way. Having a clear strategy, a plan in mind and all the analysis tools at your disposal is crucial to enhance your trading skills and get the desired results.
5. Try a different strategy
It’s also important to occasionally shift your perspective and test new approaches. If you’ve been trading with the same strategy for a while, it may be time to try something new. There are dozens of great strategies for different assets and markets out there, so pick a new method and give it a go! If you aren’t sure which strategy could be a good choice for you, check out this article: 5 Most Common Trading Strategies You Need to Know. You might not find the perfect strategy right away, so test a few approaches to choose the optimal option for you.
Breaking a losing streak might be challenging, but it is an experience that may teach a great lesson. Following these steps might help traders manage any risks and/or losses, stop losing money trading, and start a new, possibly much more productive chapter in their trading career.
