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There is no big secret to successful forex trading. Anyone can become a highly profitable trader, but it requires immense discipline and an unwavering ability to accept any losses that you may incur. If you can do this then you are well on your way to becoming a profitable trader.

Most people new to forex trading make the mistake of trying to come up a system that churns out winning trade after winning trade and never loses. However this is just pure fantasy. Even the most profitable trading systems lose every so often and so it’s the way that you handle these losing trades that will determine your success.

Some people simply cannot handle losing money, so forex trading is not necessarily the ideal occupation for them. The fact is that you have to learn to deal with losses, and more importantly, you have to learn how to manage these losses in order to keep them small. For example, if you placed ten trades, and only one of them was a winning trade, you can still make money if every loss was a small one and the one winning trade banked a lot of points.

To do this you need to use a stop loss every single time you place a trade. Protecting your capital is extremely important. Furthermore if you target big winning trades or let your winners run for as long as possible, then you don’t necessarily need to use a system with a high winners to losers ratio.

This is exactly what I do when trading the forex markets. If a trade goes against me I exit the trade at the earliest opportunity for a small loss. If it goes in my favour, however, I will close half my position for a set number of points and let the other half run for as long as possible. The great thing about this system is that this second half of my position essentially becomes a free trade because I always move my stop loss up to my initial entry point, so the worst case scenario is that I break even with this portion of the trade.

The crucial point is that you have to manage your losses. This means cutting your losses and accepting defeat as soon as a position moves against you. If you do this and capitalize on any winning trading decisions that you make, then there is no reason why you cannot become a successful forex trader.

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