Many people are wondering how to maintain their hard earned trader money when diving in and out of these crazy markets. Forex can be easy, but the discipline to do what you need to do in forex to keep your account from going bust is the ultimate challenge. A challenge that requires skill, tenacity, and discipline. I have always talked about discipline in forex. Today, I want to talk about how you get good at forex by maintaining your trader money.
The first thing I want to suggest is to STUDY!
Study and learn your candlesticks/bars, whether it be japanese candlesticks, Heiken Ashi candlesticks, Synergy APB, Renkos, etc. It doesn’t really matter which one, although regular candlesticks provide more of a visual signal than your bars. Heiken Ashi and APB bars can provide a more clearer indication of the overall trend. This is the language of your charts, interpret it and learn it well! Get to know the language of the charts like you get to know a significant other. You can not be successful in forex without a deep understanding of chart language. The world wide web itself provides limitless, invaluable inexpensive material on candlesticks and bars. My favorite site that helped me learn in the very beginning of my journey is babypips.com
Trader Money Preservation using The Trend
Essentially, you have to learn to be a chameleon. You have to have the ability to adapt and sometimes very quickly as price may change from it’s course and choose a new course. This will help you maintain and preserve your hard earned trader money. Forget the “Trend is Your Friend” concept. The trend doesn’t care about you. But rather, “You need to be the Friend of the Trend”. Because when IT changes, you’d better change too!!!!! You must be confident. You need to observe price movement and study past charts. You have to take baby steps and keep going forward. Trade tiny amounts first with REAL trader money; get your feet wet before jumping in the pool. Open one position at a time until you are proficient and disciplined enough to handle more. You have to be able to WAIT for a class a, proper trade setup.
You have to be in the market, even if it is with a penny. You have to trade so that you can learn to deal effectively with your emotions. You must learn to control your fear, and take risk on good trade set-ups. You have to believe that you can trade successfully. I have literally made every mistake in the book that can be made, more times than I dare to think. I am no smarter than anyone else. I have probably just gotten my butt kicked a lot more. My success has come from trials and tribulations paired with unrelenting persistence on my part. A Trader is much like a Doctor or Lawyer. We are Practitioners always perfecting our craft.
Suffering From Money Lost and It’s Psychological Effects
The 5 things that are going to make us all successful in forex are these:
Bonus: Coffee (In my case, lots of coffee…)
When most Traders are facing the possibility of taking a loss, they tell themselves that they can not afford to take that loss. What I’m saying is that you can’t afford not to take it. A running loss is like a poison that sucks the life out of our accounts until it is dry. The biggest gift that I would give to all trader if I could is how to take a loss and follow profit. I know that I am always taking about this, but it is the #1 thing that causes traders heartache and financial ruin. If you are giving yourself pep talks about bad trades like, “It will come back” then you are already in trouble. I have learned to set my stop losses tightly; particularly to the last swing high/low by default. Now you may not be comfortable with that, but whatever your stop loss is, you must honor it and not move it if price is approaching it. If you are stopped out, it means that your opinion of the market’s direction was WRONG and the market did not do what you thought it would do.
So what, it is no big deal. I take losses and believe me it freaking sucks, but the truth is, once you let the bad trade go, you are much better prepared with more capital for the good trades. If you trade a good set-up, then you are eventually going to find the right trade but it is an art that requires discipline. It is all timing, discipline and set-up my friend.
Controlling The Risk / Avoiding The Snare
Trading is not hard, every day the market does 3 things, moves up, moves down, moves sideways, that’s all. What makes it hard is how we over complicate it’s simplicity. We make this a hard process by holding on to bad trades.Let the bad traders go, and never let them trap you. Solved.
Let the bad trades go, and don’t stop until you are ahead of the game. You will not get every trade right. So what, suck it up and move on. Either play with discipline or don’t play at all. If you lack the discipline to play properly, you will only be enriching the opponent with your hard earned trader money. Everyday, someone has to win this game in life and at the end of the day I want that all to be me and you should also want that someone to be YOU. I can’t win all the time, but I can score BIG when I do win. A loss is like putting a rattle snake in your pocket, and later reaching into your pocket but forgetting the rattle-snack is in there. it will eventually kill You. One of the most important things you can do as a trader is to control your risk. In other words pre-set a point that you have determined that you could possibly be wrong.
Remember, trading isn’t hard, it is just tricky because everyday the market does the same exact thing, at different time intervals. It moves up and down and sideways and gets choppy. It whipsaws, it consolidates, it stop hunts. It not only does this every day, but every week, every month and every year, without fail. Your job is to determine the primary direction of the market’s movement and try to profit from that knowledge. Sounds easy, but there are hidden traps in the market to snare you, and that’s what keep things interesting. Market Makers are always trying to to trick you before shifting price strongly against you. They are attempting to trap you in a losing position. This happens everyday in the market, and it WILL eventually happen to you too.
You advantage is in keeping your losses small. Have a predetermined amount of pips that you are willing to lose in every trade. Once You have determined that amount, say 20 pips or so on a short term trade, make no exceptions to that rule!
A free running loss can be a major game changer!
It should not take a -200 pip movement in a short term trade before you realize that you have lost your advantage. If you are telling yourself, “Ah it will come back”, chances are very good that you have already lost. You’re in deep doo-doo. Being a pro trader does mean that you never take losses, being a Pro Trader means that you never let losses take you out of the game.
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