One of the main driving forces for Forex traders is to escape the
confines of their daily monotonous grind. We all fantasize about
breaking free of conventional jobs and experiencing freedom while making
money from our computers.To get more news about
WikiFX, you can visit wikifx official website.
But, does that mean you can just sit on your couch and casually press buy and sell buttons while watching Game of Thrones？
Probably
not. The reality is, you‘re leaving a world that you’ve been raised to
survive in and jumping into one that nothing has prepared you for. In
Forex, a different set of rules exist.
As a trader, we know in
the back of our minds how important risk management is – not only for
our accounts health, but our mental health as well. Get it wrong and you
will take a nose drive financially and emotionally – get it right and
the returns will naturally flow in.
The approach of the average
trader makes it very difficult for them to ever earn profits or sustain
real growth from Forex trading.
I talk with a lot of traders
everyday, and there seems to be a few common mistakes that keep
reoccurring. Today, I wanted to talk about risk management, and
highlight some of foundations you might be building your money
management ‘mentality’ from, which could be harming your chances of
getting where you want to be.All these questions really have a strong
focus point – the urgency of making money really fast.
The big
issue I have with these kind of ‘goal orientated’ questions, is that you
really cant definitively answer them the way the trader ideally wants
them answered.
The market is a dynamic environment. One month
could be absolutely pumping, and be ‘easy pickings’ with very lucrative
trade signals. The following month could be a complete dead zone, where
price consolidates, churns in low volatility, and doesnt allow you to
make any money off price movements.
Dont try to force rigid
monetary, or money management goals on a fluctuating environment. How
are you going to meet your criteria if the market flattens out？
Picture this, youre on the last week of the month:
What
are you going to do if you‘re no where near close to completing your
’monthly quota‘？ How are you going to respond to the self-inflicted
pressure you’ve placed on yourself to reach your monetary goal？
With
a sense of urgency, you may feel the need to be more aggressive and
start forcing trades out of the market, trades that you wouldnt normally
pull the trigger on – but you feel like you need to take decisive
action under this pressure.
The best way to remedy this is to
not set any goals at all, instead concentrate on becoming an excellent
trader who is a ‘master chart reader’ and manages risk very well.
The Wall