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The 10 most important DONT’s
- Don’t trade the money you can not afford to lose
- Don’t trade without a plan or Don’t trade with your “heart”
- Don’t trade without strict money management in place – you can lose max 0.25%-0.50% in one trade
- Don’t chase the prices or market
- Don’t try to be always in the market – one of the best positions is to be without any position. Then, you have a chance to take the next great trade.
- Don’t try to trade 24 hours a day – Simply plan WHEN you trade and limit HOW MUCH time you watch the charts and monitor markets
- Don’t trade when you are tired, feel sick or are in an emotional discomfort
- Don’t be stubborn – if you were wrong first time rather try to understand why thiat has happened over placing the again a soon after
- Don’t try to recover previous losses quickly without the plan
- Don’t try to change the market direction as you can not do that.
GBP crash (Oct 15, 2016) – Have you finally learnt the lesson?
A little Hello from Mr Price Action,
“First of all, I believe that everyone will find the value in following words. It doesn’t matter if you are new to FX markets, an average Joe or an experienced trader.
Maybe you were walking in the same shoes as I did. Actually, before jumping into FX world back in 2002, I have been trading futures on a small stock exchange. Well, back then I felt very confident that I know the rules of the game. As my trading results showed the reality, I did not! Not even close.
After seeing my loosing trades I started to look around for books covering FX market related topics. I found few of them where so called “market gurus” were trying to confirm what I have thought that 2% to 5% exposure in FX market is just fine. Well… No, it’s not fine. It’s very far from being fine!
Very often you are going to be on the wrong side of the market. Frankly, it is part of the game and nothing unusual as long as you understans the risk you are taking.
Any guess what am I talking about? Let’s start with everyday risk events:
1. Data announcements
2. Central banks speakers
3. Not expected comments, announcements…etc.
Most probably you were not caught by surprise by this kind of events only once. As you can see you may have a very good understanding of the market direction but sometimes big players (market makers, smart money…etc.), test the extreme levels before the market turns into the right direction. How many times have you been a so called “victim” of something like very unusual market movements?
Now, it should be easier to understand. This kind of action is very common and if you are risking 2% to 5% per trade your account could be down by 10% to 25% very quickly – just by placing 5 losing trades in a row.
Has it ever happened to you? Do you remember how sick you felt after such a trade? Did you blame the whole world around you?
Frankly, being down 10% to 25% after only 5 trades, it hurts a lot.
Imagine now that you are over-exposed, over-leveraged and GBP is going down. You are adding to the position and it keeps going down. You seem to be fine for next 150/300 pips…
You keep adding again and again. And then suddenly, you get a Margin call. But something like that happens only when the market is going against you slowly. Otherwise you may have a full blown Stop out without any mercy from your broker.
Also, you may be lucky if it all ends up with you not being forced to top-up your account because of negative cash balance as a result of your adventure.
Sounds like a joke? Oh No. I’m far from that.
Wasn’t the GBP crash enough for you? What about the SNB un-pegging the CHF in 2015? Or maybe a flash crash in stocks in 2010? Nothing, not yet? Let’s recall the events like Lehman Brothers in 2008 or so…
I’m pretty sure you understand what I mean by that. It is just a very simple thing that is called „A proper risk management”. You do not really need to “Risk Big to Earn Big”. Try to earn more while risking less.”
Do you want to learn more? Join our free Live Trading Room by clicking here and let’s have some good trades together.
Price Action Trading Intro – Part 1
Check on how my FX charts look like and get the first basic explanation why I’m trading “naked” charts. Let’s learn more about Price Action Trading/Market Makers Method in the below video:
Risk Management Intro – Part 1
How Big should I trade? Should I Big to win Big or rather Small to win Big? Let’s have a look at basics of risk management:
Should you have any additional questions or you would like to discuss other crosses as well feel free to contact us anytime at: landoftradingATgmailDOTcom. We are here to assist you.
Mr Price Action
DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom