THREE: Start Out Small Then Add On
One of the biggest mistakes a trader can make is to over trade their account. They can trade too much of their account or have two much on one trade. The more a trader puts on one trade the more emotional energy they use. Eventually they could blow up their account and have to start all over again.
Most beginning traders will over trade their accounts trying to get rich quickly. Not taking time to learn why they have made or lost on their trades. They just throw money at the market and watch what happens, for good or for bad. Experienced traders know better than to put it all in. They will plan their trades, implement their plans and grow their account gradually.
If you are a day trader and put in too much of your account on any one trade you can clean out your account quickly. Good day traders who survive will risk only a small portion of their trading capital on any one trade.
One of the worst things in the beginning is to have a new trader with too little money. They will loose their account quickly and not even know what happened.
Many times inexperienced traders start out with a lot of confidence and little or no experience. A move takes off and looks like a sure thing, the problem with sure-thing trades is that:
1. The market hardly ever cooperates.
2. Everyone else sees them as sure things as well and jumps aboard. So when they go wrong, they go wrong big-time because of overconfidence and over trading.
We suggest to start out with a small amount on a trade, once the trades is confirmed that it is moving in a solid trend then add on to the trade. This way you risk the least amount on the trade when it is most risky and risk more when it is less risky.
Tags: Forex market, forex strategy, forex tips, Inside The Trader's Mind, Trading smart, Trading Tips
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