Two big mistakes that Forex traders make are as follows: they let their losses run and they cut their profits short. Ideally, Forex traders should be doing the complete opposite in order to make some real profits.
The trouble is, when you make a profit, you want to cut it short just in case it sinks back down to a loss. It really depends on what Forex trading strategy you are adopting though, of course. If you are day trading, perhaps a quick buck (or less) will be enough for you to justify cutting a profit short to bag it and run. However, trailing stops would be more ideal for longer-term trading strategies, as they automatically adjust themselves as your profit increases, so your stops move up as your profits move up. Regardless of whether or not you take advantage of trailing stops though, your mindset should still be in the right place: think longer-term. Don’t see a profit and take it as soon as you can. If you truly believe in your trade, let it run its course before cashing out.
Similarly, make sure you cut your losses. Employ stops according to your Forex trading plan, which should be clear and precise. You should know your Forex trading tactics inside-out before you even enter the markets.
At the end of the day, it will be your profits and losses all added together that determine whether or not you are profitable overall. Obviously you want to be profitable. In order to become a profitable Forex trader, you do not necessarily need to make more profitable trades than loss-makers. In order to become profitable, the sum of your profitable trades need to outweigh your losses. So you might make lots more loss-makers than profit-makers, but as long as your profits are running and your losses are kept short, your profits will be able to outweigh your losses.
If you think you are guilty of cutting your profits and letting your losses run, make sure you change up your Forex trading tactics so that you can ensure you aren’t leaving money on the table. The money is there to be made, you just need to be able to effectively take advantage of the opportunities the Forex markets presents to you.
In conclusion, in order to become a profitable Forex trader, you don’t need to make more profitable trades than losses, you just need to let your profits run and cut your losses short. Becoming a profitable Forex trader is about letting your profits run and cutting your losses short, not about making more profitable trades than loss-makers. It is pretty simple advice, but lots of people make big mistakes and don’t even know it. Sometimes it can be hard to correct these mistakes due to factors like your emotions and psychology, but this is nothing you can’t overcome with practice and experience. It might take some time, but if you work at it, you will become a more successful Forex trader in no time.