Why You Give Back Profits After A Winning Streak - Blackswan Fx
Why You Give Back Profits After A Winning Streak. Learn how to prevent it from happening to you in forex trading

Why You Give Back Profits After A Winning Streak

“Why You Give Back Profits After A Winning Streak”

As a forex trader, you know the joy and satisfaction that comes from a successful winning streak. But have you ever found yourself giving back all of your profits shortly after a winning period? This scenario is all too common in the world of trading and can be one of the most frustrating aspects of the profession.

So, why do traders give back their hard-earned profits after a winning streak?

There are several reasons, but one key factor is the recency effect, a psychological phenomenon that describes how people tend to remember and act in accordance with events that happened more recently compared to those that came before.

The recency effect

can cause traders to become overly-influenced by their most recent trades, leading to a false sense of confidence about their trading abilities. This false-confidence can cause traders to make all kinds of mistakes, ultimately leading to losses that can wipe out profits earned during a winning streak.


Trading is about probabilities, not certainties. Every trade is unique and independent from the previous one, meaning that the result of one trade should not influence your next trade. By focusing too much on recent trades, traders can lose sight of their long-term trading goals and start making irrational decisions.

Overcoming the recency effect

To overcome the recency effect and false-confidence, traders need to shift their mindset to focus on probabilities and long-term goals. It’s crucial to have a trading plan and stick to it, regardless of recent wins or losses. This will help traders to stay disciplined and avoid making rash decisions based on emotions.

Withdraw Some Profits

Another key strategy to prevent giving back profits is to create a tangible connection with your trading profits. When profits are simply digits on a computer screen, it can be easy to lose sight of their real value. To combat this, consider withdrawing some of your profits each month and holding the cash in your hands. This creates a sensory and emotional connection with your profits, making them feel more real and significant.

When you can see and touch your profits, you are more likely to trade defensively to preserve your capital. It’s important to remember that losing profits can have a significant impact on your mental and financial well-being, so it’s crucial to treat profits with the respect they deserve.

Overall, unnecessary losses after a winning streak can be a major setback for traders. By understanding the psychological factors at play and implementing strategies to combat them, traders can improve their chances of long-term success.

Overconfidence Kills Your Profits

One of the most common traits that bring down traders is overconfidence after experiencing a winning period. It’s essential to remain humble and treat each trade and day the same as those before. There is no room for ego in the market, and hot-headed traders who try to prove the market wrong usually end up losing money.

As a professional trader with years of experience, I have seen many traders fall victim to these common pitfalls. That’s why we offer professional trading courses that help traders understand the problems they may face and offer concrete solutions to overcome them. By focusing on developing a disciplined and strategic approach to trading, traders can increase their chances of long-term success and avoid giving back their hard-earned profits.

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Lack Of Discipline

The other issue that traders face when giving back profits is a lack of discipline. When they experience a winning streak, they tend to become overconfident and deviate from their trading plan. They may take on more risk than usual, enter trades that don’t meet their criteria, or stay in losing trades for too long, hoping for a turnaround.

Discipline is crucial

It allows traders to stick to their plan and avoid making impulsive decisions. It involves having a set of rules for entering and exiting trades, managing risk, and sticking to a predetermined trading strategy. Without discipline, traders are more likely to make emotional decisions based on greed, fear, or ego, which can lead to losses.

Trading Plan

To overcome this issue, traders need to establish a trading plan that includes a set of rules for entering and exiting trades, managing risk, and maintaining discipline. They should also keep a trading journal to track their progress and identify areas where they need to improve their discipline.

Poor Mindset

Another factor that can cause traders to give back profits is their mindset. When traders experience a winning streak, they may become complacent or develop a sense of entitlement, which can lead to a lack of focus and discipline. They may start to take their success for granted and stop putting in the effort that got them to where they are.

Counteracting That Poor Mindset

To avoid falling into this trap, traders need to maintain a growth mindset and focus on continuous learning and improvement. They should view their success as a result of their hard work, discipline, and perseverance rather than luck or talent. They should also set new goals and challenges for themselves to stay motivated and avoid complacency.

Failing To Manage Emotions

Finally, traders may give back profits because they fail to manage their emotions. Trading can be an emotional rollercoaster, with highs and lows that can affect a trader’s decision-making ability. When traders experience a winning streak, they may become overconfident, which can lead to greed and reckless behavior. Conversely, when they experience losses, they may become fearful, which can lead to indecision or panic.

Develop Emotional Intelligence

To manage their emotions, traders need to develop emotional intelligence and learn how to control their impulses and reactions. They should also practice mindfulness and stress-reduction techniques to stay calm and focused during volatile market conditions. By developing a strong emotional foundation, traders can maintain their discipline and avoid making irrational decisions that can lead to losses.


In conclusion, giving back profits after a winning streak is a common issue that many traders face. It can be caused by several factors, including the recency effect, false confidence, lack of discipline, mindset, and emotions.

To overcome these issues, traders need to develop a trading plan, maintain discipline, maintain a growth mindset, and manage their emotions. With these strategies in place, traders can achieve long-term success in the forex market.

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