Yes you read it right... Do Not Trade... that is a defensive strategy and the final one, if not the most important.
Common traits of new traders : One way or another, we're all impulsive whether we realize it or not. Agree? Fine...
Let me further reiterate this point.
When it comes to making money, most of us (if not all) would get very excited and the moment our deposits appear in the trading account, we couldn't wait even a minute or two in order to execute our first trade and so on, looking forward to make our first buck from the forex market. Surely there's nothing wrong with that but...
The problem here is that we thought we knew everything since we already done it with the demo account. Yeah sure I myself have turned a million dollar (demo) account into 5 million within a week. Looks easy right? Coz it's not real money... We do not care even if we lose since we can always open another account without any fees.
So what's the point here. I must say this is very much related to self control and discipline which is very easy to say rather than done. By refraining yourself from trading, regardless of how the market behave, will train you to strengthen your self discipline and composures. Doing this repeatedly will make you cool in planning your trade properly and profitably.
But how can I make money if I don't trade?
Yes if you don't trade you won't make money, but surely you won't lose money either - 100% confirm. Entering the market will not guarantee you to make money too, but a sure way to lose money if you got it wrong. Right?
As stated above, the number one reason for you not to trade is to make sure that you won't lose your money. Trading blindly can sometimes bring money to your account but if you check the statistic carefully, you will realize that you actually lose more than you gain.
So, only enter a trade when you have done all your prior analysis and homework. Even if you miss the train (especially a mega breakouts), there is always the next one as long as the forex market is there. Do not worry as currency will always be bought and sold without stop.
I do not say that you shouldn't trade at all since the point here is... we only trade when there is a clear chance for us to take advantage on the market movement.
If not sure, the best way is to stay out and stay there as long as it takes.
I believe you have heard somewhere that trading without a proper entry and exit strategy is like driving a car without a destination. Technically you may drive the car safely but without proper planning and maps on which direction you are driving, chances is you would end up running out of fuel (i.e. margin call) or driving it on the opposite direction of the road, that would surely crash you into another oncoming vehicles. (i.e. going against the market).
So remember. Do not trade if you're not fit and ready to trade. Treat this seriously and chances you will survive and prosper in this market.
Always bear in mind that trading is a zero sum game and the figure shows that only 10% of traders that make real money in the market.
So, let us be the 10% instead of the 90%. Without doubt, the world is unfair. So be it...
All the best...
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