|A Collection of Informative and Interesting Articles|
|HOME||LOGIN||SUBMIT ARTICLES||TOP AUTHORS||WANT AN ACCOUNT?|
Risks and Losses of a Forex Trading SystemBY: Steven Matrix | Category: Education | Submitted: 2010-11-02 07:21:32
Article Summary: "Core psychological areas that you will need to be aware of to be a successful forex trader. Expectations are emotional and psychological, and trading psychology should be the most important focus for a new trader..."
Not a day goes by when I'm not asked to counsel a new forex trader on trade management and realistic expectations. Expectations are not projections or probabilities. Expectations are not a statistical or analytic animal. Expectations are emotional and psychological, and trading psychology should be the most important focus for a new trader. Trading psychology will determine your success or failure over the long term, period. In this article, I will cover some core psychological areas you will need to be aware of to be a successful forex trader.
Unquestionably, never risk over 5 per cent of your account balance on any one trade. It means that your extreme Stop Loss on any other trade shall not surpass 5 percent of your total account balance. For example, if you have a $1000 account, 5 per cent of $1000 is $50. This means that your maximum stop loss shall not exceed 50 pips ascertain you're trading one mini contract with a value of $1 per pip. I see new Forex traders every moment risking 20, 30, even 40% of their account on one trade. With that risk, and four losing trades in a row, you'll wipe out your account. You won't last long taking wild risks like that, and the psychological damage will be lasting. So minimize risk. Use 5 percent as a maximum risk threshold. Personally, I risk not exceeding 1-3 percent on any trade. If you have a larger account, you must follow the same rule, no exceptions. Though you are good trader, it's not unheard of to have 6 up to 8 losers in a row. No one likes it, still if you stick with a 1 to 3per cent risk limit, be convinced and also be psychologically do for it, it will roll off your back instead of breaking your spirit.
Many traders wish for Van Helsing's cross to raise when this hellish beast shows it soul-stealing teeth: Losing trades! A new trader will often feel ashamed after obtaining a losing trade. He feels that he has made a mistake and beats himself up over it. Penance does bad in this life, so confess your trading fault, resolve to sin no more, but do not plague yourself. Listen to the Truth: Losing trades are part of the game and are to be generally expected. Forgive yourself, and move on, but never give up. It's the trading journey that overall will be correct, not each individual step. So welcome each misstep. Like a stallkeeper paying rent to keep his store open, losses are part of the cost of doing business as a forex trader.
About Author / Additional Info:
Comments on this article: (1 comments so far)
• A Foot Washing Experience
• Track Day Camera For Making Youtube Video HD 1080p Camcorder
• Why Newspapers Will Soon Become History - Online News Sources Win
• Image Editing - In Less Than 30 Seconds
Latest Articles in "Education" category:
• Reading Comprehension: Question-Text-Answer-Relationship (QTAR) Part 1
• Reading Comprehension: Question-Text-Answer-Relationship (QTAR) Part 2
• Reading Comprehension: Scan-Question-Read-Write-Review (SQRWR)
• Expository Poetry
• Context-Clue Strategy: Teaching Students Word Solving Skills-Part 1
• Context-Clue Strategy: Teaching Students Word Solving Skills-Part 2
• Attention Grabbers: Getting Students' Attention Without Shouting
Important Disclaimer: All articles on this website are for general information only and is not a professional or experts advice. We do not own any responsibility for correctness or authenticity of the information presented in this article, or any loss or injury resulting from it. We do not endorse these articles, we are neither affiliated with the authors of these articles nor responsible for their content. Please see our disclaimer section for complete terms.
Copyright © 2010 saching.com - Do not copy articles from this website.
|| Home | Disclaimer | Xhtml ||