With all the crazy moves in the markets these days, I’m pretty sure some are staring at large drawdowns or even dealing with a completely blown trading account.
Before you retreat to a dark corner and swear off trading forever, remember that blowing up an account is a lot more common than you think.
You’ve probably heard people claim that 90% of traders fail during their first year. I don’t know how accurate that number is, but plenty of traders do struggle early on.
I’ve blown my fair share of accounts too, committing several of the mortal trading sins along the way.
Poor discipline, reckless position sizing, ignoring the trading plan, and revenge trading are all common reasons traders eventually see the dreaded margin call.
The good news is that even experienced traders have hit rock bottom and managed to come back stronger and more consistent.
Believe me, recovery is possible.
Before you curse the forex gods and ruin your trading karma forever, here are four steps that can help you get back on track.
1. Accept your losses
The first positive step towards recovery is accepting that you blew up an account.
Some traders allow the negativity to sink in, causing them to believe that they will never be good enough to be consistently profitable.
Successful traders take a different approach. They accept that trading involves risk and that large losses can happen when mistakes pile up.
Blowing an account is never the goal, but it doesn’t have to be the end of your trading journey.
Instead of sitting around doubting yourself, treat the experience as an opportunity to learn, grow, and become a better trader.
Promoted: Ready to Rebuild After Blowing an Account?
Rebuild your discipline, test your strategy, and prove you can follow your rules before risking real capital again. FTMO is a global prop firm with a 4.8★ rating on 40K+ reviews, serving traders since 2015. No time limits. Free trials. Up to $200K in Demo Capital.
Start a free trial with FTMO!
Disclosure: To help support our content, we may earn a commission from our partners if you sign up through our links, at no extra cost to you.
2. Find out what went wrong
Once you’ve accepted that the money is gone, it’s time to ask yourself an uncomfortable but necessary question:
“Where did I go wrong?”
You’ll probably find the answer in your trading journal. That assumes, of course, that you kept one and recorded the details of your trades honestly.
Were you risking too much on each position?
Were you overleveraged?
Did you follow your trading plan, or did you start making decisions on the fly?
Does your trading system still match your personality, schedule, and tolerance for risk?
Review what you were doing before the account collapsed. Look for changes in your behavior, position sizing, trade selection, and execution.
The goal isn’t to beat yourself up. It’s to identify the mistakes that must not follow you into your next account.
3. Go back to demo trading
Don’t cringe just yet.Going back to a demo account might not feel like much of an ego boost. It’s a little like becoming a major league pitcher and then being sent back to the minor leagues.
Where’s the fun in that?
Still, there’s no shame in practicing safely while you rebuild your rhythm and confidence. Put your ego aside. It’ll pay off in the long run.
The market humbles everyone eventually, no matter how experienced they are. Even professional traders don’t blindly jump back into the market after a major setback.
A sensible trader understands that confidence must be rebuilt through solid execution, not through one oversized comeback trade.
Use your demo account to test any changes you’ve made to your strategy. Practice following your rules until disciplined execution starts to feel normal again.
4. Open another account
There’s no specific time period for you to stay on demo (you’ll know when you’re ready). Open another account with the amount of money you are only willing to lose. I repeat – only trade money that you are willing to lose.
This time around, don’t overleverage and use proper risk management.
And make sure that you stick to your trading plan like white on rice!
You may not see your profits build up right away, but being a disciplined trader is a major victory.
One last very important thing to keep in mind: Do not be easily discouraged. If you don’t believe in yourself, nobody else will. It’s up to you to pick yourself up and keep going along your path.
Blowing an account often comes down to a gap between having a trading plan and actually following it. Premium members can read our lesson:
📖 Sticking to Your Trading Plan
Reading this helps you understand why discipline breaks down under pressure, how to avoid the costly execution mistakes that wipe accounts, and what it takes to follow your rules consistently over time.
And if you’re not a Premium subscriber yet, now’s a good time to sign up.
With Babypips Premium, you get full access to School of Pipsology lessons that help you understand not just what went wrong in your last account, but how to build the discipline and structure to prevent it from happening again.
