The 2% blues.

I am, what most would consider, a rookie trader. I started to get into trading forex in about January. I did what I considered great for about two weeks. The I hit the phenomenon where I held sway over the worlds economies. No matter what trade I placed the markets would immediately turn around and go against me. I even considered contacting the chairmen of World Banks to contract with them to curb or enhance their economies simply by placing a small trade. I finally got past that hurdle.

Now I have what I call the 2% blues. I cannot get above 2% below where my account started. For instance, if I open a new $5000 account, I will make a couple winning trades and then a big loss that will put me below where the account was opened. Then my wins and losses hold me at 2-4% below opening balance. Hopefully I broke that today as I pulled into the plus side of my account by about 7%. I am not really asking for any help I am just sharing an interesting mental hurdle that I have.

Does anyone else have any interesting mental hurdles they have, had or need to overcome?

One of my friends started a forex account with a minimal $300, in which after wire fees, were reduced to around $270....He traded for 3 weeks, making it up to $480, around 77% gain, and then on the 6th of October 2005 (The day where Egypt celebrates it's victory against the Israeli army in Sinai, ), he lost them all (Almost) and his account stood at around $80, blowing up everything in a couple of hours....

I met him late at night on that day, and he told me about his experience and how he blew up days and days of hard work just because he was convinced that the Euro must go down on that day, while it actually went up around 240 pips...He said that he is now convinced that he can really make money in the forex markets


Thanks,

Nader

When i first started trading, i believed it was all about how well my account went, and how quickly i can push it up.

The harder i pushed, the more i lost...

Anyways, after a while i realised it was all about money management, and money management is the key to keeping your account afloat and to progressing.

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One suggestion would be to use the power of compounding for your account. For example, dont trade in lot sizes, but in a percentage to your account. i.e. Trade 2% of your account total at a time, rather than a 10k lot at a time. This way over time your account will improve exponentially.

What i actually do is trade 2% of my account total from the beginning of the month - say 2% of my account total is equal to 50 lots, and then try to perform with the simple rule, of:

Pips gained > pips lost.

Then at the end of the month i evaluate my account size, and then for the beginning of the next month, i recalculate what my new 2% allocation would be in terms of lots. And repeat the method all over again.

More importantly stick to a system that will ensure the above, method of gaining more pips than what you lose. Make sure your system incorporates an effective money management plan, that outweighs reward with risk. Than your sure to see your equity curve improve exponentially over time!

ha

so true

at the panel at the recent expo, all of those guys manage millions, and they only use .5 to 1%

I would risk more on higher probability trades with a high risk reward tho. Sometimes even as high as 10, but thats pretty wild and I'll just stick with my 5 max

Thanks for the help guys. I will try the 1-2% of my account method of money management. I think I am pretty much ready to start trading because most of my losses are because of risky trades that I wouldn't do with real money. But since it is a demo account I've got nothing to lose. It's kind of a trial and error sort of thing.