Five guaranteed ways to prevent losses on winning trades


Jul 3, 2020
As a Forex trader, I want to ask you a question. What would be the most disheartening feeling you can have?

An absence of a lucrative setup definitely counts in, but as per my opinion, to lose capital on a trade which was once profitable is the worst feeling ever.

Let’s take a scenario where with each passing hour your profit is pacing up in an upward curve and everything is falling right into place. You can almost reach the hard cash with your hands that will result from the 150 pips that have moved in your favor.

However, the Forex market has something else decided for you.

You running at a 50 pips loss instead of your expected 150 pips profit. The gut-wrenching feeling comes when you think that lady luck had initially shone on you and the market had moved 100 pips in your favor, before reversing completely without any prior warning.

Believe me, it has happened to every one of us and we all know how it feels.

I am not saying that the feeling fades away with time, but there are ways with which you can definitely prevent it from happening again in your upcoming trades.

In my post, we’ll discuss five sure shot ways to prevent losses on winning trades.

All the measures have been designed deliberately to safeguard your capital and fetch more revenue during a trade.

  1. Assess your Support and Resistance Levels
As per my knowledge, it is always advisable to learn the accurate identification of support and resistance levels. Assessing the levels should be your main concern while trading.

Let’s get an idea of assessing the key levels in the market.

Do you remember the old school days when your teacher would hand over special guides before a test?

Those guides used to give a generic idea about the test topics to help you learn effectively.

This way you used to perform exceptionally well during your exams.

I apply the same theory in the case of key support and resistance in the ever-changing Forex market. No matter whether the levels are horizontal or diagonal, you can channelize your efforts and focus on the most relevant areas.

If you are planning not to follow this step, you’ll end up knocking around every candlestick, waiting for the right time and place to begin.

Trust me; it’ll be the most annoying and deserted place ever.

But, by sculpting these levels, you can find a place where you can start discovering new buying and selling opportunities.

All of this is not rocket science!

People tend to complicate things. No matter whether the trader is starting a fresh chart or has rubbed out the indicators, it’s never too difficult to get back to your old practice.

Adding MACD (Moving Average Convergence Divergence) tool seems to be a risk-free idea, but before you could take an action, there’s MACD, RSI, Stochastic and other moving averages on each and every chart.

And there you are back to square one with a hazy image of graph on the charts.

The question here is how to find those critical areas?

Without going into much detail, I’ll point out a few things to keep in mind:

– Follow daily as well as weekly timeframes
– Chart out important swing highs and lows
– Focus on major turning points
– Get yourself acquainted with horizontal lines before moving on to trend lines.

With years of experience in trading, I have understood why most traders lose. They generally draw innumerable levels leaving less or no room for even a single candle to fit, resulting in a creation of an unfavorable setup.

So, the rule is- don’t complicate the things. Concentrate on major swing highs and lows on the daily/weekly time frames.

In case you are a beginner, get your hand-on horizontal levels before adding the trend lines.

Identifying support and resistance levels is a continuous process and constant practice will eventually help you master the art.
2. Watch out for the External Forces

As a trader, the foundation of my trading plan is to never depend on fundamental factors for making decisions.

I keep myself updated about weekly market movements and study the predictable impact of a particular event on the market.

To cite an example, let’s take the non-farm payroll report into consideration. We all know that it occurs at the commencement of every month and is one of the most powerful events that affects the U.S. dollar position big time.

Keeping this in mind, it would be a risky step to trade the U.S. dollar around this time. Or it could be similar for any other currency at respective news events.

Let me tell you the point where most of the traders stumble upon…

Depending on the satiation, before a major news event breaks, I generally stick to an existing position instead of entering a new position.

For instance, let’s assume that I have a short position of EURUSD i.e. more than 200 pips and on the daily frame the currency pair has closed below a significant level.

If I ever face this kind of situation, I might stay with volatility and trail my stop loss to fetch profits in case miraculous number appears.

Otherwise, if the short position closes only at 50 pips ahead of non-farm payroll, I might close the trade.

It ultimately boils down to how risk-aversive you are.

I have met several traders who decide to exit the market before or after major news breaks without studying the market direction. For them, it’s about trusting the instincts and following the approach that works best for them.

  1. Trailing Your Stop Loss Order
The concept of trailing a stop loss order is not new to us but is definitely one of the most argued topics in the Forex world.

If you move your order too early, you run a risk of a premature stop.

If you move your order too late, your profitable trade may incur losses.

What’s worse than taking out a 50 pip gain and then watch how the market runs another 300 pips in your expected direction.

I know this has happened to all of us many a time.

But, what can be more disheartening than missing out on a quality setup. You have a perfect idea, bang on entry point and boom! You are kicked out in no time.

Let me take you through two key factors that can help you avoid premature take outs

-Always assess your support and resistance levels
-Always evaluate the daily time frame

Amalgamation of these two factors can help you procure more profit without aborting prematurely from a trade.

I often find traders entering the daily chart trailing their stop-loss orders on the hourly chart.

Believe me, it’s a huge mistake to commit if you are a newbie.

It may bring you a fortune for a small time period, but eventually, it will cause you more losses than profits. A sudden spike on an hourly chart can trigger your stop loss and market will act against you.

So, if you are trading on a daily chart, follow the daily time frame while trailing.

  1. Never Feed your Greed
It’s an awesome feeling when you are on a winning trade spree.

All your tiring days and nights of chart analysis and study sessions finally pays off.

It’s the time to practice self-control; boasting about it may cause you to lose a lot of money.

Here, I am talking about moving your profit target.

A simple act of moving your target for even a technical reason is an act out of your subconscious mind’s greed.

Don’t worry; I have a solution for this.

-Every time you enter a position, remember to set the target
-Once you have entered the position, remember not to modify the target

There are times when you bring entry and target closer to each other.

It’s ok to do so…

Your greedy subconscious mind refrains you from taking less profit and would help you think logically.

On the other side of the coin, moving a target away from an entry point is always agreed driven act.

  1. Strive for a Power-Packed Trade Plan
Before entering a trade, you should chart out a proper trading plan.

Else, the market waves will blow away you trading boat.

Plus, don’t get confused between a particular trade plan and a comprehensive trading plan.

Let’s make it sound simple to you,

With a trading plan, you are determined to win a battle

Whereas, with a trading plan you are determined to win a ‘WAR’

Does it make any sense to you?

We know how vital a comprehensive trading plan is, but it is always fruitful to concentrate on the significance of having a proper trade plan, often called as a ‘battle plan’.

In 2007, when I started trying my luck in Forex trading, setting a target and a stop loss was my target, rest everything was an afterthought.

Similar to a battle scenario, trading needs prior consideration and a proper planning to fetch great outcomes.

What happens in case the market closes above/below a particular level?

What happens in case the market forms a pin bar or engulfing pattern against your position?

What news influences your trade?

It’s imperative for you to assess these questions and make a plan so that you are well prepared in advance.

If your trade lacks a prior plan, your emotions may take over.

But, in Forex trading there is no place for emotions.

Before entering a trade, you need to abide by the rules of the market.

A complex plan can leave you confused, so I urge you to keep it simple and easy to execute.

Moreover, make stop loss and target values a part of your plan.

There is no harm in the trail and run because even an imperfect trade plan is better than no plan.

To Sum up

Losing a winning trade is one of the worst feeling ever. From a 100 pips peak to a 50 pips drop, trader’s dreams are shattered.

Every one of us have once shared the same feeling. But, if you’ll execute your trading plan as per the five rule stated above, I assure you success in your future Forex trading ventures.

Before entering a trade, I always identify the key levels, keep an eye on the event calendar and execute as per the written plan. The perfect combination of these three factors can help me maintain a strong position in the market.

Additionally, it’s a good idea to trail your stop loss for grabbing profit in favorable market conditions. Always keep in mind to move them at the right time else you could lose profits quite easily.

Share your thoughts

Tell me your views about the article. Also, suggest a few ways you can avoid losing money on winning trades? Or which is the most challenging thing for you as a trader?

Share your thoughts below or write your queries, we’ll get back to you with a quick reply.

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Apr 12, 2019
Very nice article on very important topic in forex. I find that there is no way to prevent losses all the time. Nobody can have 100% winning deals. The only thing which you can do is to learn how to control risks on the market


Active Trader
Aug 5, 2021
I think you made some good points and this was helpful! Although we're all bound to lose at some times, it's nice to have some tips to help reduce the amount of losses we all incur. Thanks for posting.