Forex recovery steps: what to do after a series of losses

5 min readNov 30, 2024

Experiencing losses is an inevitable part of Forex trading, but how a trader responds to these setbacks can make all the difference. Rather than letting emotions take control or quitting, it’s essential to develop a recovery plan that not only recoups losses but also strengthens trading discipline for the future. In this guide, we’ll explore effective strategies and practical steps to get back on track after a string of losses.

What to do after a series of losses in FX trading?

Recovering from a series of losses in Forex trading requires a disciplined approach and a clear action plan. Losses can shake confidence, but with the right recovery strategies, traders can regain control and even use the experience to improve their skills. Here’s a comprehensive look at what to do after facing setbacks:

Pause FX trading and evaluate the situation

Example: Imagine you’ve lost five trades in a row on the EUR/USD currency pair. Take a break and look back at the trade entries, exits, and decisions. Ask yourself: Was there a common factor in the losses? Were you trading during high-volatility news events? Did you enter trades impulsively without confirming your indicators?
Practical advice: Set up a journal to document each trade’s rationale, strategy, and outcome. Reviewing this log can reveal patterns in your trading that might be leading to losses. For instance, if you’re constantly losing trades on Fridays, it might indicate the need to avoid trading on that day when volatility is often high.

Identify weaknesses in your FX trading strategy

Example: Say you typically rely on the Moving Average Convergence Divergence (MACD) for entries, but during your losing streak, it’s been consistently giving false signals in a sideways market.

→Check out: How to use Moving Averages in CFD trading: strategies with XTB, Plus500, XM, AvaTrade, and Exness

Practical advice: Adjust your trading strategy to match market conditions. For example, MACD may work better in trending markets. In sideways markets, consider adding the Relative Strength Index (RSI) or Bollinger Bands (BB) to identify range-bound trades. Test these adjustments on a demo account to confirm effectiveness.

Revisit and adjust your FX trading plan

Example: Let’s say your trading plan specifies that you should risk 3% of your capital per trade. After the losing streak, this percentage may be too high for your current account balance.
Practical advice: Lower your risk per trade to 1% or even 0.5% to protect your capital as you rebuild. Calculate position sizes carefully, and ensure each trade aligns with your new risk parameters. A tool like a position size calculator can help you apply these limits precisely.

Reinforce risk management with stop-loss orders

Example: If you’ve experienced big losses by not having a consistent stop-loss strategy, it’s time to refine it.
Practical advice: Implement a rule to set stop-loss orders for every trade, such as placing stops at the previous swing low/high or setting them a fixed number of pips away, depending on volatility. For instance, in high-volatility markets, place stop-losses further away to avoid premature exits. Tools like the Average True Range (ATR) indicator can help you adjust stop-loss levels based on market volatility.

→More about Forex risk management tools.

Manage emotions with a “cool-down” period in FX trading

Example: After a losing trade, you feel frustrated and want to enter a new trade immediately to “get back” what you lost. This is often called “revenge trading” and is usually driven by emotion rather than analysis.
Practical advice: Implement a mandatory waiting period after a losing trade. For instance, take a 15-minute break to reassess your mental state before placing a new trade. Use relaxation techniques, like deep breathing or visualization, to regain focus. This practice can prevent emotional decisions and improve your overall mindset.

Demo FX trading to rebuild confidence

Example: Suppose your losses make you second-guess your trading abilities. This lack of confidence may lead to more mistakes.
Practical advice: Return to demo trading to test your strategy without financial risk. Focus on using the same strategy you’d apply in live trading, so the experience is as realistic as possible. Track your performance, and only return to live trading when you’ve regained consistency.

→Pro tip: Choose reliable Forex brokers with demo accounts that are complete copy of a real ones.

Set realistic and incremental recovery FX goals

Example: If your account has decreased by 10%, avoid the urge to recover it in a few trades. Instead, aim to regain 1–2% per week.
Practical advice: Break down your recovery into small, achievable targets. This gradual approach allows you to make conservative, well-thought-out trades without taking excessive risks. Celebrate minor gains as you rebuild your confidence and account balance.

Leverage Social trading for learning and inspiration

Example: Suppose you’ve encountered multiple losses using your own trading strategies, and you’re feeling unsure about the direction to take next. Social trading platforms can provide a wealth of insights by allowing you to observe the strategies of successful traders.
Practical advice: Platforms like eToro, AvaTrade, and NAGA offer social trading features where you can follow or even automatically copy the trades of experienced traders. Use this as a learning tool rather than solely a shortcut to profitability. Start by observing traders who align with your goals and risk tolerance — note how they manage positions, set entry and exit points, and adapt to different market conditions.

Stay educated and adapt to FX market changes

Example: Let’s say your trading strategy worked well in trending markets, but recent losses came in a range-bound market where different skills are needed.
Practical advice: Continue learning by reading about different market conditions, indicators, and strategies. For example, if your losses stemmed from range-bound markets, research strategies specific to these conditions, like breakout or mean reversion tactics. Use TopForex.trade academy for more insights.

Continue reading for more tips:

Forex recovery plans: how to bounce back after a losing streak

Forex recovery steps: strategies for overcoming losses

Recover from a series of Forex losses with effective strategies, risk management tips, and trading discipline.

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