The Sad Facts about Trading

View previous topic View next topic Go down

Re: The Sad Facts about Trading

Post  sharecash on Sun Oct 17, 2010 2:37 pm

I have prepared some Excel spreadsheets to show you how you can convert your small trading account into a substantial sum of money if you have a profitable trading system or profitable signals and if you know the three Keys to making money in Forex trading. But before we go through the spreadsheets, let’s briefly cover the three Keys to making money in trading Forex.

sharecash

Posts : 3
Join date : 2010-10-17

View user profile

Back to top Go down

The Sad Facts about Trading

Post  mrthought on Sat Sep 04, 2010 5:11 am

The sad fact is that most traders fail to make money, or even survive the first few months of trading due to two factors:

1. A poor trading system.
2. Poor money management

We can provide the first one for you – that’s the easy part! However, the second part is even more important and I want to show you what you can achieve if you do things the right way and if you follow a systematic money management approach.

I have prepared some Excel spreadsheets to show you how you can convert your small trading account into a substantial sum of money if you have a profitable trading system or profitable signals and if you know the three Keys to making money in Forex trading. But before we go through the spreadsheets, let’s briefly cover the three Keys to making money in trading Forex.


Key number 1: Managing risk per trade

Key number 2: Managing risk per account

Key number 3: Compounding profits

Ok, so let’s go through these keys one at a time. Let’s say you were able to get your hands on a profitable trading system or someone was willing to send you profitable trade alerts.

Would this mean that you would automatically make money trading your account?

No way!

The problem is that, as hard as it is to learn how to trade the market, it is even harder for most people to manage their account. This is mainly due to inexperience and wrong, emotional decisions. I can’t help with the emotional side (although there are some excellent books on the psychology of trading at available, but what I can help you with is gaining experience in converting a winning trade system or signals into money in the bank.

It’s all about money management.


Key number 1: Managing risk per trade

Trading involves risk. Every trade we take has a chance of being a winner and a chance of being a loser. There is simply nothing that will ever change that…

No-one knows where the market will go next with certainty.

What we can do is to develop systems which give us an edge of better than 50:50, and the systems we use win about 65-70% of the time. The other 30-35% of the time the trades are losers. This does not make the losing trades bad trades, but it simply means that the trades fell into the “good, but losing” group.

When a trade goes against us, the best thing to do is to close the trade for a relatively small loss and to wait for the next opportunity.

Many novice traders tend to hold onto losing trades, or even add to losing positions. This has a terrible effect on your account equity, risk of losing more and your emotional well being. Anyway, I don’t want to dwell on this subject, but I must stress that if you follow a trading system or signal, follow it precisely. Do not risk more than the 30-50 pip stop loss employed and do not add to losing trades.



Kids Lighting
Wood Projects

mrthought

Posts : 62
Join date : 2010-08-29

View user profile http://realestateinvietnam.blogspot.com/

Back to top Go down

View previous topic View next topic Back to top

- Similar topics

 
Permissions in this forum:
You cannot reply to topics in this forum