subject: How to Know If You Are Trading Forex and Gambling [print this page] How to Know If You Are Trading Forex and Gambling
How to Know If You Are Trading Forex and Gambling
"Will Losses of 70, 90, 42 and 39 Pips Nearly Wipe Out Your Account?"
A prospective trader interrogated after he saw the forex signals track record with four consecutive losses of 70, 90, 42 and 39 pips.
His question went like this: "Hello Steven, your overall trade results look good but, for example on week of August 16th 2010, you had four consecutive losses of 70, 90, 42, and 39 pips. Won't that trigger a margin call or nearly wipe out my account?"
My reply: Whoa buddy! Slow down. I am sorry, but what you're doing does not even come close to resemble actual trading. Please forgive me, but I'm going to be a little harsh here.
If what you are asking is correct, then you are mostassuredly gambling. If losses of 70, 90, 42, 39 pips can destroy your account, you are using WAY TO MUCH leverage. Stop it now and take this business seriously! If you want to gamble, then go to Las Vegas and get it out your system.
Come back to trading when you are ready to make reasonable returns of 60-100% per year. Not 60-100% weekly!! It ain't gonna happen!
Remember that the best world-class traders, those that are the cream-of-the-crop, the very best-of-the-best, the most elite traders in the world are managing 3-8% per month, so why are you aspiring for 3-8% per day? Are you a better trader then these seasoned hotshots? No way Jose!! Yes, you may hit an occasional home-run by swinging for the fences and those winners will fill like you just hit the jackpot, but this is not trading man.
Let's take trading seriously. The first order of business is capital maintenance. You must protect your trading account. Your trading account is the life-blood of your career. It is what keeps you in business. Respect your account like no other.
Manage your leverage and trade size so that if you had losses of 70, 92, 42, 39 pips, your account draw-down would not 3-4%... maximum! Yes, you got it right. I am saying that a loss of 243 pips should only make a easy dent in your trading account that should never exceed 4% of your account size.
What I am saying is alarming to your trading career. It is essential that you aware exactly what I am advising here.
Do you want to make a income from your trading, or do you want to gamble occasionally and continuously fund your account each time you blow it up?
The choice is yours, but I can only help you if you are serious about improving your trading career with the forex trading signals and education can benefit you, but only if you are ready to trade like a pro.
Let's recap: If drawdowns of 250 pips are scaring you, what about 600 pips that we may possibly see at with the forex signals? Nobody likes these draw-downs. I hate them. You hate them, but they happen to even the best of traders. Trading is streaky like that. Even at a 600 pip drawdown, your account should decrease only 6%. certainly no more than 12%! Here is a rule of thumb: 1% for every 100 pips in either direction. For example, if we lose 500pips, then you have a 5% draw-down."
