Having a trading system and a set of rules.
Using trading capital that will not have an impact if it is lost.
Develop a win-loss ratio
Good money management

When we lose it can trigger negative emotions.  You can lose money and recover but if our emotions and
self-confidence are lost then we will have a hard time trading and recovering from a loss.  We can feel
bad about foolishly losing some resources and get angry at just plain losing, which will get things out
of prospective. We will then start to make some slight changes to our trading and not even realize it.
If we do not get it under control then our trading discipline can get lost and we will soon be out of
trading.

Traders need a system to keep them in control after losing on a trade.  Many people that deal with real
time like traders and athletes will get a trainer or someone they can talk to. You will need another person
to talk to, to help you maintain balance and deal with things when you start to feel sorry for yourself.

Having a good attitude is just as important as money management and a good trading system.  The system is
only as good as the trader and the execution of the trades.  So we need to trade like a robot and suppress
our human emotions.  Just follow the rules, develop a win-loss ratio so you know when to look for weaknesses
and manage the trades for maximum profit and minimum losses.

Here is a little chart to see what it takes to recoup a loss at different levels.

% Draw down            % Gain required to
Recoup loses

10                                          11.11
20                                          25.00
30                                          42.85
40                                          66.66
50                                          100
60                                          150
70                                          233
80                                          400
90                                          900
100                               Out of Money

Once you reach your draw down level you should close all trades without thinking about it and find out
what you are doing wrong.  Here are some things to think about:

Am I following my trading system?
Am I following my trading plan?
What is my state of mind?
How is my physical condition?
What do I need to do to correct the problem?

By following these simple rules of preservation you will be around for another day of trading and not be
emotionally and financially destroyed.  We all can have a string of bad trades.  The best thing you can
do is step back and give it some time.  The most common problem of poor trading results is when a trader
gets away from the trading strategy that was successful for him.  By using good money management and
following the trading rules will give you the opportunity to be able to stay in the trading game until you
can figure out what you are doing wrong.  By having some rules to follow it is usually quick and easy to
see what is being done wrong.  You should be able to spot some rule breaking by looking at just one losing
trade.  You should not have to go for long periods of time and many trades to see that you are doing some
things different.

The first rule is to trade money you don’t need.  If you don’t need the money then you can be more in
control of your emotions and your trading.  Make sure that the money you are trading with is not needed
for personal living expenses.  You need to know that the more money means to you, the harder it is to
trade.  To a trader money is just a means of measuring your trading results and success ratio.

Most traders feel that you should not risk any more than 5% of you trading account on any one trade.
We feel that you may want to consider 1, 2 or 3 % to start with.  So if you have an account of $8000,
you should only trade $400 or 8 mini lots at one time using 5%.  When you use 2% of your account you will
only be trading 3.2 mini lots per trade.  The reason to trade with such a small amount of money is to stay
in the game and let the probabilities work for you. Preserve your trading capital so you can stay in the
game.  The more investment capital you have to trade, the better the chances of the probabilities working
for you.

The foundation a trading career is built upon can make a big difference in the final out come.  One of
the worst things is for a trader to have a couple of lucky trades in the beginning and not really
understand what he did right or wrong.  This will give a false sense of skill level and understanding of
the market.  When this lucky streak happens before the knowledge is obtained bad habits form and with no
method of tracking improvement a trader soon loses money and confidence so he is done.

These thoughts were split up into smaller blocks to give the concepts a chance to sink in.  Think about
where you are at in each of these areas.  Determine if you really want to be a successful trader or just
have an expensive hobby.  If you want to be successful at trading you will need to follow these guidelines
and be disciplines about staying on track.  If you read and think about what is written and apply the
concepts until they are habits you are one step closer to becoming a successful trader.

Also if you are interested here is a quick link to some basic terms in investing that we found easy to follow

Tips for Beginners to Retirement Investing

Safe Banking in the United States
Excerpted from Bob Prechter’s Conquer the Crash

If you must bank in the U.S., or if you prefer it, choose the best bank(s) available. I believe that even in a deflationary crash, many of the safest U.S. banks have a good shot at survival and even prosperity. The reason is that relatively safe banks, if they have the sense to inform the public of their safety advantage, are likely to become even safer during difficult times. Why? Because depositors in a developing financial crisis will move funds out of the weakest banks into the strongest ones, making the weak ones weaker and the strong ones stronger. One of the great ironies of banking is that the more liquid a bank, the less likely it is that depositors will conduct a run on it in the first place.

The Street.com Ratings, Inc., formerly Weiss Ratings, Inc., provides one of the most reliable bank-rating services in America. (See Chapter 18 of the last section of this book for contact information.) CEO Martin Weiss has graciously consented to provide a practical guide for this book. Table 19-1 lists what his researchers consider the two strongest banks in each state in the union. … For our purposes, I see little point in listing the weakest banks, but if you want to know which ones they are, you can find them listed in the brand-new Ultimate Safe Money Guide, by Martin Weiss (John Wiley & Sons, 2002). Weiss’ book is a good complement to this one for many reasons. Aside from banks and insurance companies (see Chapter 24), his firm also rates mutual funds, brokerage firms, HMOs and corporations with common stock.

Many of us are so excited to get started that we just click the buttons getting in and out of trades, we do not  understanding how the trading platform works,  how to manage a trade both winning and losing, we may not have a trading strategy we know and trust.  So the best thing to do is to get a good foundation of the basics.  This would include having gone through babypips.com’s web site.  Learn the trading platform, practice simulated trading, demo trading, visualization trading.  After all this start small on a live account.

Just take one step at a time.  Have many small wins and losses.  Do not get into trying to hit the homerun every time you make a trade.  It is better to have small wins rather than large frustrations.  Once you get frustrated you can become fearful, cautious, and emotional. You may even give up and stop trading.

Just to let you know what a lot of little trades can do for your account I took my live account and placed 7 trades 6 winners and 1 was a loser.  I had a total of 30.09 in profits.  As you can see in the following illustration I was using micro mini lots. I was using .1 and .5 or 10 and 50 cents on the lot size.

Lots size    Profit
.50        .52
.50        28.85
.10        .11
.10        1.34
.10        -7.69
.10        2.56
.10        4.40
$30.09

This may not sound like much but just think of it this way if you take $30 a day and times that by 250 days a year.  That is $7500 a year in profit.  So just take it slow and learn the rules of the trading system.  Once you are successful demo trading then go live and start out small as seen in the example above.
Now let’s times the trade by 10.  This gives us 5 mini lots and 1 mini lot on the lot size and makes the profit to $300 a day.  Now that is $75,000 a year.  So just take things slow learn to trade and the money will come.  Trading is not a race it is a learnable skill you are developing for the future.

You know the kinds of ads I’m talking about, “I consistently have 50 winning trades in a row with no losses let me show you how”, or “the trader that will show you how he makes thousands per day from his mountain top retreat while spending quality time with his family and pets”.  If you have even done demo trading and for sure live trading you know that it take some concentration and work to consistently make a lot of money trading.

If you trade with Unrealistic Goals, or No Goal you are setting yourself up for failure.  Your goal has to be more than “I want to make a lot of money”.  You will need to set something like I will make $xx.xx per day based on the size of your account.  i.e. $5 on a $500 account $10 on a $1000 account per day.  This equates to $1250 and $2500 per year on each of these accounts.  These figures are realistic.  Or you will only trade 2% or 5% of your account at a time.  Or you will always set a stop loss on every trade.  These are realistic goals.

I believe promotional material like this does a lot of damage to the average trader. After reading enough of these things it becomes easy to believe, (maybe not consciously), that these sorts of returns are normal.    Because traders want to believe these kinds of returns are not only possible, but also expected, they usually end up making poor trading decisions chasing the dream. The statements are not normal.  If they were then ever one would be making the huge amounts of money that others tout. If a trader puts in the time to learn how to trade they can make some good money trading.  It does not happen overnight and it does not happen without a lot of study and practice. Keep things in perspective and realize that there is no free lunch so to speak.

We feel that you should start out small then add onto the trade when there are add on signals.  By letting one half of a trade run to see if it will make more profit says to us that the trader did not know or have any indicators that would let him know when to get out.

We suggest that you should start out small with a stop loss.  When the trade moves in your direction then add on or scale into the trade once the trend proves itself.  This way you have minimal exposure when things are at most risk. When you start to add on or scale in your stop loss on your first trade should be at a break-even or a small profit so you will not suffer a loss on that trade.  We like to start small add on big then get out all at once.  If the market gave us a head fake and keeps on going then we can reenter the market with our profits in the bag.  If we see signals to reenter the market we are most likely playing with house money.  This gives more confidence because we can have a little loss and still have a profitable day.

When you can do this illustration in a demo account then start trading live.

Lets take a $1000 account for example:

Make $5 a day for 250 days a year = $1250      .005% per day
Make $10 a day for 250 days a year = $2500    .01% per day
Make $15 a day for 250 days a year = $3750    .015% per day
Make $20 a day for 250 days a year = $5000    .02% per day

Now get a part time job on weekends where you can net $40 per week.  52×40= $2080
Save the $2000 and put it in your trading account in a lump sum at the end of the year so now you start with:

$3250 $16.25 a day for 250 days a year = $4062.50 + $3250 = $7312
$4500 $45.00 a day for 250 days a year = $11250.00 + $4500 = $15750
$5750 $86.25 a day for 250 days a year = $21562.50 + 5750 =  $27312.50
$7000 $140.00 a day for 250 days a year = $35000 + $7000 = $42000

It is amazing how quickly your trading account will build up over time just by making a little bit every day.

If you can do the trading part of this illustration after 2 years you will be making more money than the example.  More important than the money you will have developed the trading skills and discipline to be on your way to becoming a great trader.  The discipline comes from following your rules, applying consistent effort toward a predetermined goal.