How To Survive Drawdown In Forex Trading
Account draw-down is an intrinsic property of forex trading.Infact, many highly respected traders have always said that there will be no market if there is no retracement.This statement is as true as saying the market takes 5 steps forward and 3 steps backward. It is therefore highly essential for a serious minded and profit - oriented traders to integrate an excellent, draw-down tolerant features into his or her trading system.As a matter of fact, any trading system that cannot withstand account draw-down over an appreciable amount of time defiitely promises gallant failure in the long run.
Whenever I am placing a trade on my forex account, I anticipate fabulous profit and envisage possible draw-down.Yes, if I open a position I know surely one of the following is going to happen:
1. The price may move towards my profit objective and strike my take profit so that I make big profit. Hurray!
2.The price may move against my bias and strikes my stop loss so that I incur small loss.I normally risk 1% or maximum of 2% per trade. A risk of 5% or 10% per trade is a sky-high risk for me, and I don`t think I can go to bed with such a risk exposure.Simply put, I don`t take reckless risks.
3. The price may not be able to hit my take profit but gives me little profit
In any event, I do my paper work before placing any order,and as such, I can estimate my possible profits or losses.By that, I avoid unnecessary emotional torture and unexpected financial losses.
Finally, all traders know that account draw-downs occur in forex trading but very few traders appreciate it. Majority of traders carry out their trading as though they have a trading system that is 100% successful. They think their trading system is the only one that guarantees profit in every trade. Let me give you a shocker; neither success, nor failure is guaranteed for any trading position.If you are thinking of holy grail system, please wake up. Holy Grail Trading System search is just another wild-goose chase.Therefore,don`t risk too much.Plan your trade and trade your plan. To success!
Whenever I am placing a trade on my forex account, I anticipate fabulous profit and envisage possible draw-down.Yes, if I open a position I know surely one of the following is going to happen:
1. The price may move towards my profit objective and strike my take profit so that I make big profit. Hurray!
2.The price may move against my bias and strikes my stop loss so that I incur small loss.I normally risk 1% or maximum of 2% per trade. A risk of 5% or 10% per trade is a sky-high risk for me, and I don`t think I can go to bed with such a risk exposure.Simply put, I don`t take reckless risks.
3. The price may not be able to hit my take profit but gives me little profit
In any event, I do my paper work before placing any order,and as such, I can estimate my possible profits or losses.By that, I avoid unnecessary emotional torture and unexpected financial losses.
Finally, all traders know that account draw-downs occur in forex trading but very few traders appreciate it. Majority of traders carry out their trading as though they have a trading system that is 100% successful. They think their trading system is the only one that guarantees profit in every trade. Let me give you a shocker; neither success, nor failure is guaranteed for any trading position.If you are thinking of holy grail system, please wake up. Holy Grail Trading System search is just another wild-goose chase.Therefore,don`t risk too much.Plan your trade and trade your plan. To success!
The Forex Broker You Can Trust
posted by Oyewole Olatunbosun @ 00:50
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