How to avoid a losing streak effectively

Trading is a business where both winning and losing take place. Everyone aims at winning, but it is not possible to predict all that happens. Even professionals lose sometimes. That is why it is so important to know some hacks that will help you avoid a series of losing trades.

Vary the assets

It is a good start to have a few assets chosen. 3 to 5 will be a good amount. They should be different in terms of type, volatility or time when they are available.

If you stuck with one asset and the situation on the market turns against you, you will not be able to do much about it. You could only trade further hoping for a quick change. But it would cost you your money.

In opposition, if you have a few assets you are familiar with, in case of the unfavourable situation on one market, you could switch to another asset. Like this, you can continue making money while waiting for the situation on the first market comes back to normality.

Make use of a demo account

Most brokers provide a demo account. In many cases, it is free of charge. Yes, it is a great place to practice before you go live, but you can also use it further along the journey. When there are no big movements on the market that will allow you to make profits, you can start to feel boredom. It can lead to unreasonable trading just to kill time.

Look, there is a demo account waiting for you. There is always so much to learn. You can use this extra time to get to know a new indicator or try a different strategy. Or you can get familiar with more assets so you can use them later on as described in the first point.

Remember to withdraw the money

Let’s say you made some profit. You are excited you have more money in the account which means you can invest more, and profit even more. This can be deceptive, though. There are always two options when you enter the trade. You will win, or you will lose. What if you incur a big lose and deplete the account?

There is something you can do to secure your earnings. Withdraw some percentage of the profit you made. It can be something around 30 to 50% of your profit. This amount will be safely deposited in your bank account while the rest you can reinvest in trading.

Limit the number of trades

In the beginning, you may want to trade all day long. You may want to sit in front of the computer long hours switching from one market to another in order to make big money. Bad news. It does not work this way. You will spend long hours at the desk, but learning rather than trading. The number of trades you make should be limited.

The purpose is to protect your account balance. If you experience a loss, then another one and then one more, you may feel frustrated and make rash decisions about entering the trades. This is a time you should remind yourself about the limits you have previously set for yourself and stop for a day.

There is yet another scenario that may lead to irrational decisions. You may have a series of successful trades behind. And you may be so excited and sure you got it all, that you may lose focus and make a wrongful entry.

Expand confidence

It may be a bit overwhelming at the start. You may sit over the computer screen watching constantly the price charts and searching for the slightest changes that can affect your trades. You may feel pressure not to lose a signal or to exit in the right moment. And although it is important to enter and exit in the precise moments, there are such tools as take profit and stop loss that can automatise trading a bit.

The practice is crucial here. And that is where a demo account comes in handy again. You should practise there until you feel confident enough to start trading with real money.

Prepare a good plan

It cannot be stressed enough that having a plan is key to success. You cannot just jump into the trading platform and open random positions. It will not bring you the profits you wish to make. A good plan will take you closer to your goals.

But you should not only prepare a plan. You should also stick to it. This is your helping hand. When you feel frustration, boredom or too much excitement, you should check with your plan what to do next. How many transactions you are supposed to make in a day, which strategies to follow, which money management system to apply and when to stop for a day.

Be patient

You have a plan, you have practised on a demo account or paper trading and now you want to finally make some real money. That is all right, but do never forget about patience. This is yet another keyword. Patience is required at every step you make. You cannot expect to build a fortune within a day. You have to be prepared for some twists and turns. You must be able to back off, to take a deep breath before you enter the trade. And you also have to be prepared for waiting a long time for good signals to appear.

Take these few points to heart. Make use of them whenever you feel the impulse to overtrade. Practice taking control of your emotions. They are very bad advisors when it comes to trading. Your decisions should be rational and based on a deep analysis of the markets. Only then you will be able to become a successful trader.

All the best!