Experience shows that many novice traders lose a lot of money when they start out especially because they do not follow some basic principles such as the following.
Learn how to manage money
This is the number one rule for all traders and without the risk of losing a lot of money it is easy and above all terribly fast.
If a forex strategy is important, in the same way the proper management of denato helps to regulate their investments and improve their performance and get better returns at the end of the day.
A good rule of thumb to manage money at its best is to never risk more than 3% of capital and have enough money to invest in at least 40 trades, this when you are at the beginning.
Always keep your emotions under control
This suggestion is perhaps one of the most important because it is one of the most difficult to achieve, since it is not about strategies but, rather, to know how to manage their emotions.
If in fact the forex knows how to be excited and funny is also true that it puts a strain on our emotions, exaltation and anger. As the first thing must be clear that operating in the forex must not be a hobby but must be taken seriously, a profession and with the same seriousness with which you face a job then you have to do the same way trading.
You win money. You lose. But when you lose and you begin to lose in the same way your rationality, the step between the small loss and the entire loss of capital is short.
The moments in which we are angry, or we want revenge and we do not think lucidly is one of the most dangerous. When you have lost 10 trades accordingly, knowing how to handle their emotions is difficult and succeeding in it will make you closer to the right attitudes to make a proper and profitable trading.
Always use a stop loss
Stop loss is perhaps the most powerful weapon a trader can use when trading.
Stop loss is applied in times of loss, it indicates the level beyond which not to go, when you are losing, automatically closing the position, just to limit any future losses.
Usually you decide to set the threshold between 5% and 7%, this means that the position remains open until you reach that threshold (so the stock loses the percentage date, 5 or 6 or 7%), at which point the position will be closed. An advantage that is not indifferent and we advise everyone to always implement.
Unless you’re incredibly lucky you can’t really expect to close 80% of the trades with profit and turn a capital of $500 into a $10,000 in a few months.
With these expectations you are deceiving yourself and, probably, you will face a great disappointment, and a possible failure (because in this case it is also the difficulty to manage emotions):
Try to look at things with realism from the beginning.
Determine a possible percentage of trades in relation to your strategy, ask yourself, and carefully define, how much time you can devote to learning. A clear view of tools, timing and conditions will help to design a suitable strategy for profitable trading.
Let’s assume that your strategy wants you to risk an average of 15 pips to win 30. After 200 trades you realize that 50% of the trades were profitable while the rest were not and were stuck with the stop loss.
So you saw 3000 pips (100×30) and lost 1500 (100×15). To these 1500 pips you also have to deduct the cost of brokerage, which is variable, which is typically about 2 pips per position, or 400.
Your real gain is 1100 pips. So be realistic and work hard!
Interact with other traders
There is no better teacher than those who started out like us and gained experience, like the pro-traders. Not just the books or articles that can be found online. Communicating and interacting with other traders is very important to improve your strategies and solve your doubts.
Don’t worry, and ask questions, I’m sure you’ll be surprised to find out how many pros are ready and happy to answer and help you. Become part of a partnership, share your strategies and let yourself be helped to improve them, or help those in need.
It’s even more enjoyable to win if you do it together.