Forex Trading Risks – Don’t Be Caught Off Guard
John Templeton asked:
A lot of traders just jump into the forex market without really taking into account the kind of forex trading risks that are involved. Let me help some of these kind of traders.
I think many traders believe that all they need to do is find the best forex trading system, and everything else will just fall into place. Sadly, that’s just not the case. If you don’t have a decent grasp of money management, you are not going to make it far. You may be the greatest trading analyst in the world, but if you don’t know how to handle your margin, it doesn’t mean anything.
Another big misstep that a lot of traders take is that they don’t know how to deal with emotions like fear and greed. A lot of traders start off on demos, which is fine, but I’ve got to give you a little bit of a warning. Your emotions are not the same when you are on a demo account compared to trading with real money.
When you use a demo, all you are really doing is testing out your strategy. You are not really testing out your emotions. You don’t really have any idea how emotions can affect your entries, exits, etc… I think you’ll be quite surprised how emotion can affect your trading decisions.
For example, let’s say you take a 100 pips drawdown on a demo account. Do you think your heart rate is going to be accelerated as much as when you are trading with real money? I don’t think so.
Honestly, there are traders who will always be able to make money when they are on a demo. But many of those traders will struggle when they are on a real account. Remember, that only 5% of the trading public is making money.
Bot Guard
A lot of traders just jump into the forex market without really taking into account the kind of forex trading risks that are involved. Let me help some of these kind of traders.
I think many traders believe that all they need to do is find the best forex trading system, and everything else will just fall into place. Sadly, that’s just not the case. If you don’t have a decent grasp of money management, you are not going to make it far. You may be the greatest trading analyst in the world, but if you don’t know how to handle your margin, it doesn’t mean anything.
Another big misstep that a lot of traders take is that they don’t know how to deal with emotions like fear and greed. A lot of traders start off on demos, which is fine, but I’ve got to give you a little bit of a warning. Your emotions are not the same when you are on a demo account compared to trading with real money.
When you use a demo, all you are really doing is testing out your strategy. You are not really testing out your emotions. You don’t really have any idea how emotions can affect your entries, exits, etc… I think you’ll be quite surprised how emotion can affect your trading decisions.
For example, let’s say you take a 100 pips drawdown on a demo account. Do you think your heart rate is going to be accelerated as much as when you are trading with real money? I don’t think so.
Honestly, there are traders who will always be able to make money when they are on a demo. But many of those traders will struggle when they are on a real account. Remember, that only 5% of the trading public is making money.
Bot Guard