“Boet, as soon as you take a trade according to your strategy and you have your risk and reward levels set, step away from the market and grab a Castle Lager. It's scary watching the market move and knowing your money is at stake” - Vernon
Reply by Timon Rossolimos:
I remember, back in the early years of trading I did the exact same.
As soon as a trade lined up and I put in all my trading levels according to my winning trading strategy, I went to get a nice Stella Artois beer.
But saying this, I grabbed a beer to take me away from the computer so I don’t interfere with my trade.
And by interfere I mean, watching every tick, moving my stop loss and take profit levels or just tell the market to move.
First year of trading, I remember taking my finger and trying to push up the price of the stocks I bought looking at the computer.
It’s stressful knowing your hard-earned money is now in the market’s hands where anything can happen.
But now there is a completely different reason why I would get a beer after I take a trade. Before I tell you my reason, let’s go back to Vernon because I have two things to mention.
First, If you feel you need to grab a beer because of nerves, you're probably risking too much money than you can handle.
You should only trade with money you can afford to lose.
If ever you feel emotional with the money you deposit into the markets, then you should probably risk a lot less in the future.
Second, if you feel you need to grab a beer because you have the fear of being wrong, you’re not yet ready to trade.
Professional trading comes with both winning and losing trades. It’s part of the game. The trick is to have a winning strategy where your gains are bigger than your losses.
I’d suggest you go back to the world of paper-trading, so you can see how you can grow your account with winning and losing trades.
Do this until, you feel more prepared to trade a real-account.
“I've learnt that I need to place a stop loss with every trade I take. In just a few moments the Forex market can crash and you can lose a lot of money” - Thando
Reply by Timon Rossolimos:
Thando, this lesson that you learnt was my biggest lesson to becoming more humble and successful when trading.
For the first three to four years, I also never placed stop losses.
I thought with all my impressive indicators and trading knowledge, I could predict where any markets would go.
But I learnt the hard way that this wasn’t the case.
In one year of not placing risk levels and stop losses, I blew around 30% of my portfolio.
The reasons why you can’t predict any markets movements is because of the unpredictability of the markets. At anytime, the markets can alter in direction which will cause a fake-out with your trade. A fake-out is where your trade breaks out of a pattern and then back in.
Basically, it’s a false break-out.
If you want to stay in the game, you’ll need to limit your risk and place a stop loss with every trade you take.
And make sure you only risk a fraction of your portfolio per trade, or you can lose a lot of money.
These are fantastic lessons all new traders can learn
And there'll be many more lessons still to be learnt.
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