What Happens When You Blow A Forex Account?

blown forex account

Forex (foreign exchange) is the over-the-counter market in which different foreign currencies of the world are being traded. Forex is considered as the largest and the most liquid market in the world. People enter into the forex trading with the main motive of making huge money, but very few percents of traders actually succeed.

Did you know more than 90% of newbie traders lose their money in forex? What’s the reason behind this? Its because newbie traders start trading forex with no plan or strategy. While getting started with forex trading, it is important to have a proper trading plan and strategy. Apart from this, there are various factors you need to keep in mind before starting forex trading.

There are so many mistakes new traders often make. If you are a newbie in the forex, make sure you avoid those mistakes. So important things you need to consider are choosing the right broker, having the right trading strategy, not being addicted to trading, using leverage wisely, and managing the risk wisely.

For complete new traders, blowing up a forex account may be a new term. Let’s understand what it means:

What it means to blow a forex account?

Almost all the newbie traders blow their forex accounts. To blow forex account means when you lose 100% of the money in your forex trading account. Most newbie forex traders face this situation when they don’t take forex as a business and start trading like gambling. Use proper risk management and you should be able to lose 30-40 trades in a row and still not blow your account. 

Trading can be really dangerous when you get its addiction. And, the major reason why most newbies blow their forex account is just because of trading excessively or emotional trading. Trading addiction and emotional trading lead to huge losses. So you should stop trading excessively.

Blowing your forex account is really very sad. When you have $5,000 in your account and lose all of them, it makes you feel the worst. That experience teaches you a great lesson. When a forex trader blows his/her account, his/her habits start changing.

The traders stop following gambling ways of trading and cowboy trading. If you trade without stop loss or use leverage extremely, you are making huge mistakes. Stop-loss is a feature that helps to stop losing money after reaching a particular point.

In a nutshell, when the forex trader follows the trading plan and maintains the trading discipline, it is less likely to lose money for such traders. Apart from this, traders should also make sure they use features like stop loss, and leverage wisely.

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Ways Not to Blow Your Forex Trading Account

Obviously, you don’t want to blow up your forex trading account so how actually you avoid blowing it? Here are some ways not to blow your forex trading account:

1. Use stop losses

There are many traders who don’t use stop losses while trading forex, it is probably the biggest mistake they make. If you are also one of those traders who do not use stop losses, then you are making a great mistake. This mistake can lead to blow your forex trading account.

The main reason why most newbie forex traders blow up their forex accounts is that they don’t use stop losses. Setting stop losses will avoid losing money from your trading account when the price reaches a certain level.

2. Research and review the market

Research is the most crucial part of the forex market. If you want to become a successful forex trader, make sure your research part is strong. Many new traders totally rely on different forex news and signals, but this is not the right approach.

If you don’t want to blow your forex trading account, you must focus on researching and reviewing the market. Many traders start trading without understanding the market sentiments & conditions, which leads to blow up of their account.

3. Leverage

Leverage is the best feature provided to you when you trade forex. Everything has its own pros and cons. You need to keep in mind that using leverage unreasonably can result in huge losses. When you use leverage wisely, you can avoid blowing up your forex trading account.

How to Recover From Blown Trading Account?

So, your forex trading account is blown, right? If you are here, you want to recover from your current situation. If you have blown your forex account, you are not the one. First of all, it is more common than you think.

You must have heard that more than 90% of forex traders lose their money and end up quitting. You know what are the reasons behind this? The reasons are lack of trading discipline, using leverages unreasonably, revenge trading, not having a trading plan, and not focusing on doing research.

When you blow your trading account, you learn a great lesson. People who blow their accounts either quit trading or they learn and avoid repeating the same mistake. Here’s how to recover from blown trading account:

1. Accept your losses

The first important step is accepting that you blew your forex account and you lost a huge amount of money. It is not like you are the only one who has blown up the account. Forex trading account blown up has been more common than you think. Instead of taking so much stress, you should learn from your mistakes. So the very first step is to accept your losses.

2. What was your mistake?

The next step is to figure out what was your mistake and what went wrong in your trading strategy. Once you accept the truth that your money is lost, now you need to check out the root cause of the account blown up. The mistake could be you had not traded as per your trading plan. So figure out what was your actual mistake so that you can avoid that mistake in the future.

3. Start demo trading

Demo trading is the best way to learn forex trading. After you understand your mistake and what went wrong in your trading strategy that leads to blowing up your forex account, the next crucial step is opening the demo trading account. Practicing the trading in the demo account will help you avoid the mistake you have made.

4. Open new account

Are you ready to enter into the forex trading again? If yes, you can start a new account, have a proper trading plan and avoid repeating the mistakes you have made. If you feel that you are not ready yet, you can take a break. There is no particular time period for which you have to use the demo account. Once you think you are ready, you can open a new account and start trading. After using the demo forex account, you would have practiced avoiding the mistake you have made earlier.

This way, you can recover from blowing the trading account. One thing you need to keep in mind that you are not alone who blown the forex account. So stop stressing things too much and follow these steps to recover from the situation.


The forex account blow up means the trader has lost 100% of his money. Mostly, new traders end up blowing up their accounts due to so many reasons. Some reasons why forex account blows up are lack of proper trading plan & strategy, usage of leverage unreasonably, and not giving importance to the research part.

Here we have shared some ways not to blow your forex account to help you avoid losing your hard-earned money. If you blew up your account, check out how to recover from blowing trading account that we have shared here.

You can also check out our New Paradigm page and learn how to never blow your account or really lose a trade with simple risk management tips.

Demo demo demo…then when you go live use minimum risk around 1% then go up from there as you get more comfortable. I never risk more then 3% on any one trade.


Tab Winner

Hello I am Tab Winner welcome to my Forex blog. I have been trading Forex and Cryptos for over 5 years now. Been a stay at home dad for about the same amount of time.

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