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What is the reason for making losses after winning streaks

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Why do traders lose money once they earn profitable trades? What is the major reason for it? Is it the trading mentality of the traders? Or is it the emotions? There are many traders who are facing this issue in trading. Even the Australian traders would have faced this issue although they are successful now. So, by analyzing the experience of the successful traders we have written an article to help you. It is obvious that giving back the money that you earned is really frustrating yet it has become an unavoidable situation. Most of the naïve traders are struggling with this issue. If you read this article, you can clear your doubts up to some extent and you can improve in trading.

We all know that the outcome of each trade is totally random in nature. No can give you the guarantee that a certain trade will hit the potential stop loss or take profit level. You need to consider the probability factor to become a full-time trader. If you want to get rich quick just by trading the live assets it will be nearly impossible for you to make money on regular basis. You need to prepare yourself for the losing trades or else you will have a tough time in near future. Learn to find high-risk reward ratio trade setups so that you don’t have to worry about losing trades. If you can trade this market with proper money management, we can assure you that you will become rich within a very short period of time.

The psychology behind it

There are many reasons why traders lose money once they face profitable trades but there is a main factor i.e. “recency effect”. This is a something related to psychology which means people remember what happened recently rather than something that happened before because their mind is trained in such way. Obviously, it is the human nature but still, as Forex traders, you should somehow overcome the feeling. In Forex trading, if you focus more on the recent results of the trades it becomes a negative factor to your overall trading career. You would always lose the money that you earn because you are with the recency effect. In Forex it is really easy to get influenced by such psychological factors and it can cause many issues in your trading journey. This recency effect is the major reason for giving away your hard earned money. You should try your best to get rid of this emotion if you want to become a successful trader.

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Not having real confidence

The negative factor that is caused by the above mentioned psychological issue is the traders become confident but it is a false confidence. Due to the previous trades, the traders build up a false confidence so, they eventually lose the next trades. If you consider a naïve trader, he would be trading randomly and then most of his trades would have been profitable but he does not know how and what strategies he used in trading. This causes the false confidence in the trader’s mindset and it is deadly. There can be instances when the trader believes that he can easily earn some profit from a certain trades but then, he does not know that it is a false confidence that has been built due to recency effect.  The best way to overcome this situation is to educate more about the Forex market so you will understand the reality of the market.

You are the controller

No matter what is happening in the trading world, you are the controller. You should understand how you are trading and if you sense any mistakes you should be able to correct in the long run. You should focus on the trading emotions and you should try to get away from such emotions. By being the controller, you can become successful.


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