A story of a typical new trader
Ok so we read 2 trading books, opened a live account with real money because we will follow the rules outlined..... and are ready to get rich over the next 6 months
Oh look a trend!!....,they say trend is your best friend when trading. First trade 2% as per the rules things are rolling good. This is gonna take a while to get rich at 2% so then we decide to go up to 4%, hey 9 trades in a row and only 1 loss, ehh we can afford to go up to 10%, will get rich quicker, haaah! winner, winner chicken dinner
This is just too easy, they say 95% of the people lose money in forex, but we think that we are smarter than most people and are part of the 5% now. Ok so we think we have enough experience now and have mastered trading over the past 4 weeks since we started, so why don’t we go up to 15% since we are playing with the markets money. Then the inevitable happens, a 15% loss
ok, ok, loses happen, even to the best of us, the next trade has to be a winner so we better place another trade at 15% to make up the other loss...... and bammm!
the volatility and spread from the news stops us out at another 15%. Ok, now we are not thinking clearly and not realizing it. We never had 3 losses in a row so the chances of a loss happening are 0% so we risk 40% because it’s a sure thing, that way we can make up for the 2 big losses, plus make 10%, perfect plan and then will drop down to 5% risk as soon as we make that money back, because we remembed reading about money management.
Oh no!!, not again, those dam institutions pushed the price up 2 pips past our stop and we are down over 70% of our balance before the last 3 trades in a correction of a good trending market. OK, we really need a break from trading to clear our head, that’s what the professionals do after some loses.
Ok 5 minutes has passed, time to make all our money back before we go to sleep, we can do it if we trade a lot of pairs. We are now being responsible and will risk 10%, because 5% will take forever to recover, so we place a trade at 10%, oh, no getting close to our stop
can’t lose again, we better move our stop so we don’t get stopped out by a spike, oh good thing we did because we would’ve gotten stopped out, that was close.
Not again, getting close to our stop, maybe we should just remove our stop, that’s a better idea, that way we won’t have a loss.
What ?? who closed our trade, what ? We better call our broker, this must be a mistake…….. Huh, what’s a margin call ?
I’m not talking from personal experience, lol, but I’ve seen people talk about risking 40% and 50% on a single trade, I personally never risked more than 4%, my norm is usually 2% and I trade about once a week, maybe twice if the opportunity is there.
Ok so we read 2 trading books, opened a live account with real money because we will follow the rules outlined..... and are ready to get rich over the next 6 months
Oh look a trend!!....,they say trend is your best friend when trading. First trade 2% as per the rules things are rolling good. This is gonna take a while to get rich at 2% so then we decide to go up to 4%, hey 9 trades in a row and only 1 loss, ehh we can afford to go up to 10%, will get rich quicker, haaah! winner, winner chicken dinner
This is just too easy, they say 95% of the people lose money in forex, but we think that we are smarter than most people and are part of the 5% now. Ok so we think we have enough experience now and have mastered trading over the past 4 weeks since we started, so why don’t we go up to 15% since we are playing with the markets money. Then the inevitable happens, a 15% loss ok, ok, loses happen, even to the best of us, the next trade has to be a winner so we better place another trade at 15% to make up the other loss...... and bammm! the volatility and spread from the news stops us out at another 15%. Ok, now we are not thinking clearly and not realizing it. We never had 3 losses in a row so the chances of a loss happening are 0% so we risk 40% because it’s a sure thing, that way we can make up for the 2 big losses, plus make 10%, perfect plan and then will drop down to 5% risk as soon as we make that money back, because we remembed reading about money management. Oh no!!, not again, those dam institutions pushed the price up 2 pips past our stop and we are down over 70% of our balance before the last 3 trades in a correction of a good trending market. OK, we really need a break from trading to clear our head, that’s what the professionals do after some loses.
Ok 5 minutes has passed, time to make all our money back before we go to sleep, we can do it if we trade a lot of pairs. We are now being responsible and will risk 10%, because 5% will take forever to recover, so we place a trade at 10%, oh, no getting close to our stop
can’t lose again, we better move our stop so we don’t get stopped out by a spike, oh good thing we did because we would’ve gotten stopped out, that was close. Not again, getting close to our stop, maybe we should just remove our stop, that’s a better idea, that way we won’t have a loss.
What ?? who closed our trade, what ? We better call our broker, this must be a mistake…….. Huh, what’s a margin call ?
I’m not talking from personal experience, lol, but I’ve seen people talk about risking 40% and 50% on a single trade, I personally never risked more than 4%, my norm is usually 2% and I trade about once a week, maybe twice if the opportunity is there.
It's NOT GAMBLING when the odds are in your favor
