August 3rd, 2009
According to some brokers, 93% of all new traders wipe out their accounts in their first few weeks of trading.
Why is this though?
There can be a number of reasons but a common one is a much too high risk/reward ratio.
Firstly, on a trade level, new traders will often set their stop loss and take profit at similar levels. For example, the stop loss and take profit levels are both 50 pips away from the entry point. This means that the risk is quite large. Risking a lot can reap bigger rewards but it only takes a few trades going the wrong way to create huge draw downs on an account.
The second reason is that often traders will risk a substantial amount of their balance by taking many trades at a time. It’s not necessarily a bad thing to take lots of trades at once, but only if the overall risk is still manageable. If all the trades loose it’s easy to get rid of an entire balance in just a few trading sessions.
Jarratt’s risk management video takes you through how he manages risk. He explains how best to calculate your stop losses and how best to manage your trades to keep your overall losses at an absolute minimum. These lessons are re-inforced every day in the chat room and the trade examples.
So if you have wiped out your balance before, you might want to try out LiveConnect and the accompanying Coach’s Corner.
Tags: coach's corner, Forex, Jarratt Davis, LiveConnect, Risk, Risk Management, stop loss, take profit
Posted in Risk Management | No Comments »
July 31st, 2009
Forex trading can be quite a lonely experience. It’s sometimes hard to know when to take a trade and without anyone to ask it’s easy to lose confidence.
Pic: Robert Thomson
That’s why making it down the road to Forex success requires two things;
- your route,
- and passengers.
First, you need to work out the route you’re going to take – this is your strategy. Any strategy needs to be guided by some basic principles and rules, too. Your forex journey is going to be a lot smoother if you can follow some basic rules.
For example, going too fast is dangerous and could cause you to have an accident. Then you might be left without a vehicle to continue your journey. You will have wiped out your balance and have to start again. Going too fast is risky, you need to keep your risk small. So you should set yourself a limit that you don’t go over – no more than 5 trades at a time, for example.
Another good rule is to stick to a certain trading session. Depending on the time zone you live in, or the hours you have available to trade this might be;
- the London session (8am-5pm GMT),
- the New York session (1pm-10pm GMT),
- or the Tokyo session (12am-9am GMT).
The second thing you need (and I do believe you can’t do without this) is passengers. People to go on the journey with. These people should be ones who know the rules and the route you’re going down and can help you stay on that route and within the rules that you’ve set.
You can also learn from your passengers – they might have a suggestion or two to help you along on your journey. That kind of support is invaluable for keeping your mind on track. It stops you from wondering off the road down dark lanes you’re not sure of in search of a possible shortcut.
That’s why Forexmentor launched LiveConnect. Jarratt’s videos help you to figure out your own trading style based on some solid principles that have made him a successful professional trader. Forex Mentor’s Jarratt has made the journey and now you can get on the road with LiveConnect at your side. Make your way into the chat room and you’ll find yourself on a coach full of other traders including Forexmentor’s Vic Noble and Jarratt Davis all taking the same steps, reinforcing each other and you.
Sign up now or explore the benefits.
Tags: Forex, London Session, New York Session, Principles, Psychology, Risk, Risk Management, Rules, Tokyo Session
Posted in Psychology | No Comments »
