A Heads Up For New Traders
Firstly, this is not a name and shame segment…
But I recently received a message from an aspiring trader that I wanted to share.
In particular, there were a few key points that I wanted to bring up, as I see these same points being made every day by excited, new traders coming onto the scene.
I’ve highlighted key components of his message and labeled them accordingly.
Allow me to make some comments regarding the highlighted wording…
1. In FX we have the 90/90/90 rule, which loosely states 90% of new traders blow 90% of their entire account in the first 90 days. The fact that this trader has given that possibility some thought is fantastic… because it’s a very real possibility to the uninitiated. The antidote is quite easy. Risk far less than you think you should.
We recommend 1% account risk on any given trade. To work this out, calculate 1% of your account, and divide that figure by your pip risk. Ensure your per pip “stake” is no more than the answer.
Even if you take max loss on 10 trades in a row, which can (and probably will) happen, you’ll still have over 90% of your capital ready to go for the 11th trade.
2. Yes, mentors cost money. But they rarely cost as much as the time you’ll spend trying to learn what they’ve learned over years in the industry.
Most new traders try to self-teach, or worse, get on free trading forums and learn from other newbies who spend their time on free trading forums.
Life success tip: Find someone who has the results you want, and copy what they do.
3. If your approach to trading is to “give it a crack”. Stop! You will not make money. Your “opponents” in the market include huge multi-national corporations, hedge funds, and international banks. Some of the smartest mathematical minds on earth are paid 7 and 8 figures to crack the patterns in the market that will generate consistent returns for clients. Considering transaction costs, you are ultimately playing a game that is slightly negative sum. 95% of traders lose money. Do not risk a cent in the market if your attitude is to “give it a crack”.
4. Never trade like this. Trade what you see, not what you think.
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