Last fall I blew my entire account thanks to a non-existent money management strategy. That and emotional trading-- staying up for literally 24 hours watching every market tick etc etc but still missing the big moves whenever I napped. Needless to say the market really taught me a lesson and I exited Forex with my tail tucked between my legs.
Two months ago, I became interested in Forex again and got together another small pile of cash. But this time I was determined to do things right. So I spent one month doing nothing but 'reeducating' myself, watching Forex videos and reading guides etc. On top of that, I discovered an excellent risk calculator that calculates SLs TPs etc for each trade. It has been a lifesaver. Then I spent a month trading demo, some would suggest longer but I have more than a year previous trading experience. And the month I spent on demo was actually longer than I practiced last time.
Long story short, last week my emotions creeped out again. I had been doing OK so far, but only gaining 3%. I made a huge mistake in position sizing as well as when and where I placed the trade. Broke virtually every rule of my system, and I paid dearly for it. Just in that one trade I lost nearly 20% of my account, subsequent losses brought that total almost to 25%!
At this point, most people would say to stop trading before you lose any more. 25% loss is a big deal no matter how big or small the account is. But I was determined not to give up or let one bad day get to me. Needless to say I learned my lesson.
Starting May 1st, I began trading multiple positions and using hedge-like tactics to protect my positions. I also employed the money management strategy I should've used all along. The last 2 days I've dropped the hedging tactics and simply reduced position sizes, only increasing them (and decreasing SL) whenever I could ride on a breakout. Now I'm proud to say that about 5 hours ago, I closed the 'second to last' trade that will bring me >= break-even.
Only 3% out of that disastrous 25% loss remains to be recovered. When you put it in perspective, had I not lost it in the first place, then I would have a 20% gain just for this week! Maybe I'm just having a good week, or maybe I am becoming a better trader. I hope to continue this improved trading. Only time will tell for better or for worse.