subject: Risks And Loses Of A Forex Trading System [print this page] RISK RISK
Indeed, don't risk greater than 5 percent of your account balance on any trade. This means that your consummate Stop Loss on any other trade should not surpass 5 percent of your total account balance. For an instance, if you have a $1000 account, 5 percent of $1000 is $50. This means that your maximum stop loss shall not surpass50 pips taking you're trading one mini contract with a value of $1 per pip. I see new Forex traders every day risking 20, 30, even 40% of their account on one trade. With that risk, and four losing trades in a row, you'll wipe out your account. You don't last long taking wild risks like that, and the psychological damage will be continuing. So minimize risk. Use 5% as a maximum risk threshold. Personally, I risk not surpassing 1 up to 3 percent on any trade. If you had larger account, you should follow the same rule, no exceptions. Eventhough how good a trader you are, it's not unheard of to have 6 up to 8 losers in a row. No person loves it, still if you stick with a 1 up to 3percent risk limit, assume and also be psychologically do for it, it will roll off your back instead of breaking your spirit.
LOSES
A lot of traders wish for Van Helsings cross to raise when this hellish beast shows it soul-stealing teeth: Losing trades! A new trader will often feel ashamed after incurring a losing trade. He feels that he has made a fault and beats himself up over it. Penance does no good in this life, so confess your trading fault, resolve to never commit sin, but do not torment yourself. Listen to the Truth: Losing trades are part of the game and are to be generally expected. Forgive yourself, and move on, but never give up. It is the trading journey that overall will be correct, not each individual step. So accept every misstep. Like a tenant paying rent to keep his store open, losses are part of the cost of doing business as a trader.
