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where we can find loads of advices how to achieve stable results and how to become successful not only in forex, but also on other markets. Unfortunately, almost each trader was confronted with such advices, however, only few of them seriously implemented them and follow them while trading.
You want to move forward, not backward
There are multiple manuals on money-management telling us also how much to risk. In general, they tend to recommend max 1-X% of trading account per trade. In case everything goes according to the plan and we’re successful, it’s a good plan. However, the problem is if it’s the opposite.
It’s important to realize that trading is not only about positive trades. Therefore, it’s very illogical to decrease the size of trading position after a single loss or just few of them. Are you asking why?
Exemplary demonstration:
On the left side of the table (red shading), we can see how the percentage value of balance on trading account is about to change in case we leave the volume of another trading position unchanged after each loss of 5% (red row - volume unchanged after loss) OR if we optimize volume after loss to achieve maximum loss of 5% again from actual trading account (red row – change in volume). The result is that after five of such losses, the difference is only 1% what may be considered as only marginal saving in relation to such big losses.
On the other hand, if we achieve five profitable positions of 5% profit (right part of table – green shading), then it’s evident that with an unchanged volume, the account will return bank to its original value while in case of gradual increase (change in volume), it won’t achieve the original value even after 5 profitable trades. And let’s be honest, it’s not a good demonstration for a properly set money-management.
Hint: In the event balance on trading account (in case of stable volume) reaches new maximum, it’s expectable to increase the volume and leave it as a new initial balance. Only in this way, we can move forward over time, and not back.
We don’t leave, not change strategy after few unsuccessful tries
In this world, there’s no strategy that would be purely profitable and it’s only a limited number of strategies, whose profitability would exceed 70%. Therefore, it’s not rare to see a strategy experiencing number of trades with losses, what in general is not caused by its failure, but simply because of the fact that markets got to position where such strategy is getting into losses and it’s only necessary to wait for it to get back to a profitable one.
At the end, permanent changes in strategies lead only to additional losses and often, this tends to be one of our steps backwards.
Let’s believe in better tomorrow
Our mental approach or psychology is often the factor that is limiting us, not only from the perspective of trading, but also in our private lives. It’s important to learn to trust in ourselves and better tomorrow (if the day today is unsuccessful, it does not mean that tomorrow can’t be different) as only in this way the trader can keep his nerves and at hard times, he is able to resist even the hardest obstacles.
Conclusion – one strategy is not enough
Modern trading requires modern interpretation of trading. As we and our world develop over time, our trading approaches, methods and of course, our competitors, do as well. Where there a single and relatively simple strategy was sufficient in the past, now we need two or more of them, even markedly advanced to achieve success.
If you would like to try out trading with top tier trading conditions and professional forex broker, don’t hesitate to try our demo account that may be open on our website completely for free and free of any risk: www.purple-trading.com/cs
We wish you many profitable trades!
Purple Trading team
info@purple-trading.com
