THE DETAILS - 1- How not to Lose All Your Money 2 - Small Losses 3 - Leave Yourself Setup for the Hugh WI N. We all have said "If I could get the direction right I could make a mint doing this". But in truth the direction of your trade is only a very small percentage of the success of your trade. Why is that? The market breathes in and out while it reverses direction continually throughout whatever timeframe you are trading. So properly managed you can make money whichever direction you trade. Get that direction thing out of your mind. That way you won't waste a hugh amount of time looking for the so called Holy Grail strategy. It doesn't exist. You find an edge in the market that gives you a slightly higher than 50% chance of getting the direction right. Learn all the other things it takes to be successful. Remember details matter. The first detail is notice the title of this post is "How to trade and not lose all your money". Please note that it wasn't "How to trade and not lose money". Get use to taking small losses, that's part of the game. If you're not willing to take small losses you should probably go do something else. Trying to trade with no losses will eventually end up with you losing all of your money. Here's the next detail. Notice I said small losses. Yes the plan is to keep the losses small. Small losses are easier to make up. If you manage your risk you can take quite a few consecutive losses and still have a significant size trading account with which to make those losses back over time. If you're always going all in and looking for the hugh win, then you are going to blow out your account in short order. How will you make up the losses without a trading account. Keep the losses small and take the small wins. Here is the last detail. Leave yourself setup for the hugh win which comes along periodically. This is where you make the big money in your strategy. Your small wins will likely just offset your small losses. The real profit comes from the times when your strategy has set you up in the right position for a big price move. Here is a quick quiz. What ties all this together. Is it the entry strategy? If you said yes to that then read this all over again from the beginning. The risk management and trade management is what ties this all together. Taking small losses but leaving a piece to go hugh if that is where the market goes. Risk only a small amount each time. Find a way to close that trade early if it is not doing what you intended for it to do. Don't close it just because it went against you. Have a plan to close it if the initial intent of the trade is no longer valid. Please don't go ALL IN. All in is never a good plan.
Excellent write and great advise especially for newbies who will probably try different strategies and learn many things the hard way. I made lossed in the beginning too, I think most if not all traders who have self learned what they know have had their fair share of losses when they first started off, including me. I agree with you on the risk management factor to keep losses small and have a strategy that will land you big moves that come with big profit that can cover many more of the small losses and make you a tidy profit as well. The trick is to first understand the basics of patterns and how to use the charting tools to work out when and where the big move might happen then work yourself into having a position that allows you to have a stop loss with the least loss but with a great potential.
Of course things can go against you even the best traders cannot 100% predict the price direction, it is the risk management and careful patient research and understanding of charts that will allow you to keep those losses small and catching those big moves when they come. Never just rely on patterns alone, a great number of these patterns don't play out as they should, the exit strategy is key always whether its when to get out of a losing trade with an acceptable loss or picking your profit taking targets. When in comfortable profit always have the stop loss moved up into a profitable position so no matter what happens you have made your money.
One thing i learnt very early on is never tp FOMO into a trade, patience in waiting for the right position and getting into the trade at the right right time is key too!
Thanks for sharing. All the best and good luck!
Tradingstrategyguides
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@mdyassink, Thanks for your comments and sharing. Great ideas.
mdyassink
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@Tradingstrategyguides, Thanks lot for taking the time and sharing great ideas. Much appreciated! Have a great week!