If you are overtrading, we advise you that you should cut back your positions or you will not see your account equity for long. Sometimes, you are doing everything right but you are still losing money. That is because of overtrading. When you overtrade by trading 10 positions at any time and you risk 2% per trade, you are effectively risking 20% of your equity. With this method of trading, you will see that your account equity fluctuates drastically. At times, you will see huge returns but you must also withstand sharp draw down.
You have been trading well, getting overly excited that you are starting to master forex trading, you start to trade more. Few days later, you start to give back all of your forex profits. Does that sound familiar?
This phenomenon seems to affect everyone from time to time. You never seem to be trading better but your equity just hovers around the same level, winning some and losing some. It can get very frustrating to the point of giving up forex trading. We understand that since we went through that as well.
The truth is you cannot possibly win the market all the time but you can certainly win some trades and you need to increase your probability of winning and improve your risk reward ratio. If you want to get huge profits by not respecting risk, you will soon face huge drawdown, you wont be able to protect your capital and you might lose your capital in the game.
Here are some measures that are recommended to put in place to win this FX marathon.