The psychological and mental aspects of managing proper risk management.
You can apply any strategy, a good system is important in addition to good money management. And understanding how to keep your account healthy. This all starts in the early stage of your entire trading journey substantiating your trading plan, in this you take your risk management with you. What are you willing to lose? And how can you stay in the game as long as possible even after a losing strike?
Imagine that you take a risk per trade of 0.25% and your aim for a 4 R trade. So that means that with a winning trade you have 1% return. The next trade is a winner again which makes 1% return and the next two are 2 losers. Which only means that you always have 1.5% profit and only 0.50% loss of the 2% profit you had. Just a quick bill to show you how powerful proper money management can be.
Example.
I have outlined a clearer picture for you below with as ”example” a large price range with the possibility to aim 4R or higher.
Risk management in trading
The asset is US30 this asset lends itself to such large price ranges. This trade was based on a supply zone a liquidity push in the poc lasting New York session. It’s about you to see and understand what is meant here the power behind the risk management so the risk will be 0.25 for 1% profit.
Of course you will be able to increase it slightly, for example to 0.50% or a 1% and maybe 2% maximum?
Risk management in trading
Do you have your risk management on point? Well done! If not, start doing this today it’s key as you can see.
Conclusion / Risk management in trading.
As you see now it is clear that that whole piece of psyche with the correct application of a risk management is critical. To keep your account healthy because nobody in this industry has or maintains a 100% hit rate. Every trader loses and it is part of our job. Our job is only to be and remain the risk manager and to keep our discipline level maximum to keep our company healthy ”the account”. There is no person on earth who runs a successful business and goes all in and or Putting 30 to 50% of your account on the line. This will mean losing your entire account with two or three losing trades, and therefore your company. I’m writing this piece because we probably have all this at the beginning of our journey been through or experienced this. There comes a point where you realize this has to change to last in the long run. This is just a small part of this retail industry who really understand this.
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There is one feeling that FX traders hate naturally, the frustration of watching a losing trade turn deeper and deeper toward them would probably be. If the trade is left unregulated, things could very easily get very nasty. A position overleveraged can result in an outsize loss and as a position can move against you for an extended period of time, such losses can irreparably affect futures.
In Forex market trading the most difficult part of forex trading is to deal with financial losses. It’s not only a matter of pain and misery, but it’s also a fact that losses are typically the trigger that drives traders to make their worst mistakes, which can result in even greater losses, causing a vicious cycle in which the trader’s account spins out of control. Sadly losses are an unavoidable part of forex trading and if you can’t recognize that, you can’t boost your trades or become a reliably successful trader.
While it is a natural part of the overall trading cycle, losing is something that is challenging for many traders, both beginners traders and pros. The primary factor behind the question of dealing with losses is the lack of comprehension rather than real psychological problems. Individuals who suffer loss underestimate the negative feelings attached to them, which may cause anxiety and despair. This eventually makes them stop forex trading altogether. Individuals who can’t live with the losing psychology end up quickly quitting the forex trading market.
The first stage of defeat helps you to handle the losing trade. You convince yourself and others in this process that your trade idea was incorrect, and that the loss was not your fault. You are moving on to rationalizing your trade setup after the denial point. It is the point in time when you point out everything about your trade idea that’s right and don’t even care about what you’ve done wrong. You quote the suitability of your trading strategy, benefit target, stop loss and entry point, but completely ignore the fact that you have actually lost the trade and made a mistake somewhere.
Although some Forex traders may benefit from forex trading on a regular basis, others are struggling to achieve the same level of success. Traders who are consistently effective can manage losses effectively, take them in phase and move on with ease with the next trades. They are confident with loss cycles, and are able to trade effectively with ongoing control, given the losses that occur. Through training in Forex Market themselves and working regularly, they are continually seeking to better their trades.
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When you don’t have your risk under control at every trade, you simply open the door for the friendly but emotionals neighbours to come in and dominate in your house.
We promise it’s hard when you start trading at the Forex market.
Because it is an emotional market.
It’s hard to stop trading emotionally once you’ve started or even admit you’re trading emotionally.
The game is about how much you lose or better said how you minimize your losses.
Manage your risk
Not about your winnings.
We all have that gambling friend that always talks about his big winnings.
He never tells you about the day he lost $1000 on one hand of Black Jack does he?
A good example that shows you how important it is to minimize your losses.
You don’t want to lose that $1000 you’ve won with 100 hands on one hand do you?
So set your losing limit before you trade.
This has to be an amount that your completely OK with losing.
If you lose it’s just another day at the office.
Manage your risk / Why Risk Management is so important:
Risk management is vital for success, safety and sustainability in Forex trading.
Risk management won’t let you lose more on a trade than your comfortable with.
Even if you are one of the best traders or you have this unique talent to see the right spot to step in a trade.
Without good risk management you will never be a successfull trader on the long term.
Basic knowledge is to always go for more PIPS as your willing to lose.
Manage your risk
Want to know more about trading in forex / forex mistakes or do you want to join the forex group?
The forex group is mainly English!
Please contact me so that I can explain you much more about what we have to offer.
And all your questions can be verbs.
No one likes losing money.
Even the richest of the rich hate losing money.
So fear will always be a part of this game.
Key is to find a way to switch it off and believe in yourself!
The Forex market is like any other business, most business aren’t profitable in the first years so don’t expect a miracle starting at the Forex market.
However, with the right skills and mindset you can be successful in a few months.
Don’t rush success.
It’s like surfing.
Learn to ride the waves and fear will be in your past.
Once you know how to ride the waves of the market or the sea you have little to no fear to take them on!
-Revenge / Forex mistakes:
An emotion that is as old as Santa and the pope combined.
After a losing trade it’s pretty normal to feel revenge.
You want to make up for your losses.
People that have been to casino’s before probably know this feeling really well.
It’s also just the way our fantastic brain works.
To protect yourself keep in mind there is no such thing as a guaranteed winning trade.
So don’t take it personal when it is not your fault at all.
For example: You’ve just made a trade GBP/USD.
You’ve bought a lot USD.
Forex mistakes
An hour later something like 9/11 happens again….
Obviously the position of the USD is going down.
Was their anything you could do about this?
No! Unless you work fort he CIA or something like this.
Than again if you have a job like that you probably shouldn’t focus on trading.
Point is. Sometimes there is just noting you can do about it.
Why would you be hard on yourself and try to make up for it.
That’s the point were emotions are getting involved and you start losing more.
-Greed / Forex mistakes:
Greed is arguably the most dangerous of all emotions.
When you experience an upswing or streak of winning trades it can give you that wonderful feeling that you are the king of the world.
The feeling of: I told you so!
Maybe you think, oh well, this is just so easy let’s take some more risk.
I’ve proven to right all the time in the past.
Why would I be wrong this time…?
The human brain simly want more and more of that success.
This is were you need to stay humble, take your winnings, give yourself o pad on the shoulder and move on to you next winning trade.
There is the possibility to add more money to a successful trade.
This means higher the initial risk as well.
If you do this just out of greed your making a wrong move.
If you have a good reason for doing so than you’ve made the right decision.
Forex mistakes
When your account balance goes up doesn’t mean the size of you trade needs to go up as well.
When you know your goal and when you’ve reached it you probably won’t be tempted to risk your whole account blindfolded.
The avalanche effect of greed will occur when you hear success stories of other traders that make you want to have the same success as well.
Always remember that, even good trader, will only make 80% winning trades.
Meaning he losses 20%.
These 20 out of 100 losing trades can very well may be all in a row.
Does that mean you’re a bad trader? Not if you stayed with your plan and strategy.
-Risk Management:
When you don’t have your risk under control at every trade, you simply open the door for the friendly but emotionals neighbours to come in and dominate in your house.
We promise it’s hard when you start trading at the Forex market.
Because it is an emotional market.
It’s hard to stop trading emotionally once you’ve started or even admit you’re trading emotionally.
The game is about how much you lose or better said how you minimize your losses.
Not about your winnings.
We all have that gambling friend that always talks about his big winnings.
He never tells you about the day he lost $1000 on one hand of Black Jack does he?
A good example that shows you how important it is to minimize your losses.
You don’t want to lose that $1000 you’ve won with 100 hands on one hand do you?
So set your losing limit before you trade.
This has to be an amount that your completely OK with losing.
If you lose it’s just another day at the office.
-Organized trading / Forex mistakes:
Clarity and a good organization are the two aspects that your success will depend on.
What do we mean with organized?
Stick to your plan and read your trading journals.
Remember it is not a casino where you just gamble on black or red.
Forex is about knowledge and having a plan and stick to it.
-The pitfalls / Forex mistakes.
99% of the traders make mistakes.
So here are the most common mistakes for you so you hopefully won’t make the same mistakes.
-Losing trades / Forex mistakes:
Losing trades are just another day at the office.
It’s just that simple.
Don’t let them get to you.
Every trader on Wall Street or trading from his home office will face losing trades.
A trader with a 80% success ratio will still lose 20 out of 100 trades he makes.
Keep your risk tight, safe and disciplined.
-Losing money / Forex mistakes:
Unfortunately 90% of all traders are losing traders.
They lose their confidence, start doubting themselves.
This encourages them to pay for bad Forex services or even desperately let other “winning” traders trade on their account.
Again, there are many people with no winning track record willing to help you for a certain price.
Don’t be desperate.
Your will land power is all you need!
Most important reason for repetitive losing traders/ Forex mistakes:
-Chart Loonatic:
There are lots of fundamental impacts that could easily distract a trader.
Also there are a ridiculous amount of trading systems and trading software, which have lots of indicators and templates etc.
As a trader you’ve got to filter these indicators and narrow them down to the ones that matter the most for your own strategy.
WARNING: This could be difficult for a beginning trader.
It’s not necessary to spend hours and hours behind the screen analyzing the news or charts.
Keep it simple and stick to what you need. Keep it organized.
-Over-Trading:
Most traders lose money simply because they trade too much.
We call this over-trading.
Over the years we have learned that traders succeed on their demo account but once the real game begins they start losing.
Once your real money is on the line your emotions are kicking in.
Prove that emotions can kill your account. Over-traders purely trade on emotions.
Everything comes down to your technical skills and not your emotions.
So try to create an environment with little to no emotions for yourself.
This is done be being organized and having a plan.
-Why Risk Management is so important:
Risk management is vital for success, safety and sustainability in Forex trading.
Risk management won’t let you lose more on a trade than your comfortable with.
Lots of traders forget about the chance of losing on a trade.
Ask yourself this question: “Why would you take more risk than your comfortable with?”
Even if you are one of the best traders or you have this unique talent to see the right spot to step in a trade.
Without good risk management you will never be a successfull trader on the long term.
Basic knowledge is to always go for more PIPS as your willing to lose.
-Aim for the money not for the PIP:
Remember Forex is a job not a casino.
Traders who approach the Forex market as a gambler or as an addict to money won’t make the right decisions.
He will start thinking irrational and make Forex mistakes.
So don’t think of in dollars but think in PIPS.
Forex mistakes
Let me break that down for you.
When your mind is on the money and you think in dollars your risk management won’t work most of the time.
There is always this voice of the devil in your head saying “What if…” Or “Maybe this or that will happen”. Stop thinking like this.
Get these dollar signs out your eyes and start think like a real trader.
It’s not that easy as use a couple of big lot sizes and flee the scene when your positions are positive.
So always calculate your wins and losses in PIPS.
Always trade with more or less the same volume.
You trading plan has to have PIP goals and PIP risks.
How many PIPS do I want to win?
Or how many PIPS do I want to risk with this trade?
-No Game Plan:
Most common made forex mistakes is not having a game plan at all.
Traders just start out of the blue without a real strategy or plan.
If your watching sports, do you think the athletes don’t have a game plan?
I bet you a $100 that every team or individual athlete has a game plan.
Don’t think like all the other traders “I’m going to make my plan after I’ve done a few trades”.
You will end up with an empty account.
Forex mistakes
Right thing to do is keep track of your trades.
Make reports of your trades (a trade journal) so you can look back at what you did and maybe change your tactics a little bit.
Organized work like this will help keeping your emotions out of the game as well.
Remember that the game plan you started with doesn’t have to be the winning one, so call a time out, look back and adjust to a winning game plan.
Pretty cool right! You can be the coach of your own professional sports team!
“When I became a winner, I said, ‘I figured it out, but if I’m wrong, I’m getting the hell out, because I want to save my money and go on to the next trade.’” – Marty Schwartz
Want to know more about trading in forex / forex mistakes or do you want to join the forex group?
The forex group is mainly English!
Please contact me so that I can explain you much more about what we have to offer.
And all your questions can be verbs.
We have developed a strategy that makes us more than 80% profitable.
Because in the forex world you really learn to fall and get up.
Every beginning is difficult but in the world of it all went.
Perhaps you have already lost a lot of money on the market?
And now you want to invest more in yourself.
Perhaps you have a dream a dream that we also had to be able to live from your trade, and to live well!
With your will, patience and trust we can make you a successful trader with our Forex course Trading is mainly about reading, observing, analyzing and striking.
An important reason for the loss of approximately 90% of traders is that they are too lazy to do the work that is necessary to be successful.
Another reason is that they do not have a trading plan.
And a trading plan is so important to get and be consistent.
They guess, gamble and hope.
Actually more gambling than they did.
Either way, if you are willing to work hard and disciplined, you could once more belong to those 10% traders who are very successful with the Forex course.
Forex course
“When I became a winner, I said, ‘I figured it out, but if I’m wrong, I’m getting the hell out, because I want to save my money and go on to the next trade.'” – Marty Schwartz
Want to know more about trading in forex or do you want to join the forex group?
The forex group is mainly English!
Please contact me so that I can explain you much more about what we have to offer.
And all your questions can be verbs.
– Don’t forget to place your Stop-loss at the daily and 4H chart at the HH-LL-HL-LH marks. – Not over two trades at once. – Keep track of your daily trade notebook and be honest with yourself. – Think in terms of percentages and PIPs. – Always save your work and stay organised.
Trading forex tips.
The quote “Your as good as your last trade” is partly true, but a professional trader who strives value and development has to look back and analyze previous trades.
If you’ve traded with a demo-account in the past, you should be aware that a big loss is recovered by one simple click on a button. That’s not how it works in the real world. It’s not our nature looking our faults straight in the eye, but this is something you need to lean. That’s the only way to work on your flaws.
Forex trading tips.
Assessing your performance will tell you a lot about you and what trading style suits you best. Ask yourself the following questions:
With which pairs do I perform best? Which pairs do I perform are my losing ones? During what time period of the da yam I most profitable? On which days have I lost the most? On what days am I most profitable? Am I more successful when long-term trading or do I perform better scalping?
Fact is that 70% of all traders can’t draw their technical analysis correctly.
Forex trading tips
Setting up your trend lines or key levels inaccurately will make you a failure even before entering the trade.
Don’t fear, Thanks to our modern technology we are capable to cut of the rough edges. By taking screenshots before and after the trade we can research if we acted correctly.
Tips trading forex
“The easiest thing to do is prepare. If you don’t, on behalf of the other market participants, we thank you.”
