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4 Money Management Mistakes That You Don’t Want to Make
One of the main driving forces for Forex traders is to escape the confines of their daily monotonous grind. We all fantasize about breaking free of conventional jobs and experiencing freedom while making money from our computers.To get more news about WikiFX, you can visit wikifx official website.
But, does that mean you can just sit on your couch and casually press buy and sell buttons while watching Game of Thrones？
Probably not. The reality is, you‘re leaving a world that you’ve been raised to survive in and jumping into one that nothing has prepared you for. In Forex, a different set of rules exist.
As a trader, we know in the back of our minds how important risk management is – not only for our accounts health, but our mental health as well. Get it wrong and you will take a nose drive financially and emotionally – get it right and the returns will naturally flow in.
The approach of the average trader makes it very difficult for them to ever earn profits or sustain real growth from Forex trading.
I talk with a lot of traders everyday, and there seems to be a few common mistakes that keep reoccurring. Today, I wanted to talk about risk management, and highlight some of foundations you might be building your money management ‘mentality’ from, which could be harming your chances of getting where you want to be.All these questions really have a strong focus point – the urgency of making money really fast.
The big issue I have with these kind of ‘goal orientated’ questions, is that you really cant definitively answer them the way the trader ideally wants them answered.
The market is a dynamic environment. One month could be absolutely pumping, and be ‘easy pickings’ with very lucrative trade signals. The following month could be a complete dead zone, where price consolidates, churns in low volatility, and doesnt allow you to make any money off price movements.
Dont try to force rigid monetary, or money management goals on a fluctuating environment. How are you going to meet your criteria if the market flattens out？
Picture this, youre on the last week of the month:
What are you going to do if you‘re no where near close to completing your ’monthly quota‘？ How are you going to respond to the self-inflicted pressure you’ve placed on yourself to reach your monetary goal？
With a sense of urgency, you may feel the need to be more aggressive and start forcing trades out of the market, trades that you wouldnt normally pull the trigger on – but you feel like you need to take decisive action under this pressure.
The best way to remedy this is to not set any goals at all, instead concentrate on becoming an excellent trader who is a ‘master chart reader’ and manages risk very well. |
