Of course you want to protect your forex account. There are some red flags that make it an easy task. There are lots of traders around as third party signal providers that may be good for a few months or so but are actually ticking time bombs ready to explode. Don’t light that fuse.

This article is intended to highlight a few things to look for and avoid. It is in no way intended to cover every problem that traders may or may not have. Now, what to look for:

Trading With No Stops

Avoid any and all traders without stops. The trader may look fine but there are uncontrollable factors that are lurking that you cannot avoid. Factors such as power outages or connection failures can effect you because the market runs fast and far on incoming news. You must avoid this type of trader like the plague. It is the first pitfall that a trader learns to steer clear of.

Huge Losses/Small Wins

Some traders get excited and pull profits off of the table far too early. Generally this is a good idea for a losing trade. You want to cut your losses short and let your winners run. This should cause your winners to be bigger than your losers. Any trader who regularly takes 10 pips of profits and has 200 pip losers on his books is no one that you want trading your account.

New Trading Accounts

These are not actually red flag traders but you should still avoid them. Any trader with only a few weeks worth of records should not be traded on a live account. You can absolutely run them on a demo for a month and take a look at the results, but if the trader is worth trading, they will still be there in 6 months. And by then you’ll have a much better idea of who you’re dealing with.

Huge Gains After A Draw Down

If you come across a trader who shows extraordinary wins at the end of an extraordinary draw down, you are witnessing a trader who has probably thrown in the towel and is hurling a hail Mary pass. To the novice forex person, this appears to be a go-to trader. For every dozen traders who go this route, possibly two boomerang themselves into recovery. Those two are the ones wafting about aimlessly awaiting the proper sucker. When they meet their next draw down, the trader will try the miracle pass again, which will undoubtedly bomb. You don’t want a trader that puts his faith in miracle plays. You want one trading on solid ground.

Remember what was said in the beginning of this article. These pearls of wisdom are only scratching the surface of things to be aware of in the world of forex.

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