Forex: Protecting Your Bank

Filed under: Learn Forex Trading |

Picture 3Protecting your bank is one of the most important elements of being a successful forex trader. Many forex professionals take a breakeven trade as a successful one. But where do you draw the line between protecting your bank and falling into a ‘trading coma’? This is an extremely subjective and interpretative line to draw.


For example, if you start to put your stop losses to breakeven as soon as your trade moves into profit, then this could in effect kill your edge. You could end up with a lot of breakeven trades, and your losers might start to overpower your winners. Personally, I have stopped moving my stops to breakeven and instead, I just let my trades move to either my stop loss or my target. In the long run, I find that this is more profitable.


Instead of moving stops to breakeven, I try to protect my bank in other ways. I am careful about which trades I take, and I try to only select the very best looking setups with the most areas of confluence. By taking this careful approach, I tend to increase my winning percentage, and avoid weak trades that would have damaged my bank. By protecting what you have and not taking high risk, low reward trades just because you want to be in the market, you are in essence, making money by not losing it.


In the end, how much you protect your bank is very much up to you, and there is a fine line between protection and running scared (trader paralysis). The key is to listen to your gut and only take the trades that really excite you rather than worry you and fill you with doubt. By only taking the trades that ‘feel’ right, you will in effect be protecting your bank against those that do not feel right. Unfortunately, these gut feelings are only developed with screen time and experience.

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