5 Deadly Mistakes That Blow Up Accounts
Every blown account I've reviewed failed because of one of these behaviors. Study the real scenarios, then write the prevention rules into your trading plan so you never repeat them.
1. Trading Without Stop Losses
What Happens:
Trader buys EUR/USD at 1.1000 with a $5,000 account and no stop. Price drifts to 1.0700 and the floating loss hits -$3,000 (60% of the account).
Prevent It:
Decide on risk before you click buy. A simple 50 pip stop at 0.2 lots would have capped the loss at roughly $100.
2. Overleveraging Every Position
What Happens:
A $5,000 account opens three standard-lot trades. Required margin is $3,300, leaving a margin level near 150%. A quick 50-pip move triggers a margin call and forced liquidation.
Prevent It:
Keep effective leverage under 1:10. On $5k, trade 0.1–0.3 lots total and stack only when free margin stays above 300%.
3. Revenge Trading After a Loss
What Happens:
After losing $200 on EUR/USD, the trader immediately doubles size on GBP/USD to "win it back." The second trade loses $400 and emotions spiral.
Prevent It:
Have a stop-trading rule. After two consecutive losses or -2R on the day, step away and review the plan before placing another trade.
4. Ignoring Major News Events
What Happens:
Holding a position through Non-Farm Payrolls with no stop loss. Price spikes 150 pips in 30 seconds, spreads widen from 1 pip to 15 pips, and the account takes a devastating hit.
Prevent It:
Close trades or use guaranteed stops before high-impact events. Volatility plus widened spreads can negate even perfect analysis.
5. Not Knowing Liquidation Levels
What Happens:
Trader never calculates the margin-call price and gets stopped out exactly where the market finally reverses. Account destroyed even though the trade idea was right.
Prevent It:
Use the liquidation formula from the Margin Call section before opening any trade. If the forced exit is unacceptable, reduce size or skip the setup.
Execution Checklist
- Stop loss entered before order submission
- Risk per trade ≤ 1-2% of equity
- No doubling size after losses
- No trades held through red-folder news without protection
- Liquidation price calculated and acceptable
Action Steps
Before moving to the next module, complete these tasks:
Module Summary
You've learned the foundations of forex trading: what it is, how the $7.5 trillion daily market operates, and the essential terminology you need. You understand currency pairs, pips, leverage, and margin. You know how to calculate position sizes and manage risk.
Most importantly, you've learned that risk management is the key to survival. The 2% rule, proper risk-reward ratios, and always using stop losses are not optional—they're essential habits that separate successful traders from those who blow up their accounts.
You now know HOW to trade. But knowing how to place a trade doesn't tell you WHEN to trade or WHICH direction to take. That's what the next module is for.
Next Module
Fundamental Analysis Basics
Learn what actually moves currency prices—interest rates, economic data, central bank decisions. Understand the fundamental factors that create long-term trends.