Lack of cashflow is why you make dumb trading decision

Beginner Questions Trading Psychology
1

This is what i’m talking about. Most people come into forex trading because they are financially desperate. (eg. Alphahavoc) When a person is financially constrained, they will make dumber decision regardless of any activity they do. The clarity isn’t there. Too much stress. Out of desperation, the self control simply isn’t there. It is too painful to bear, out of desperation, there will be many occasion of “THIS IS IT! IT IS ALL OR NOTHING!” This is what happen to me umpteen times. Only until a person can improve their financial conditions or better manage their daily living financial situation, then will they be able to manage the timely execution and control or position sizing better. Watch the Ted talk video below. " Living in poverty, you LOSE 14points of IQ! "

IF YOUR FINANCIAL SITUATION DOESN’T IMPROVE, Live trading is suicide. Improve your cashflow 1st, the old fashion way. Work hard, save money, spend money prudently. When you find that your bank account start to grow, psychologically you are more ready.

2 Likes
2

I think this is basically what we all describe as “only risk what you can afford to lose”

And I do agree that trading should not be focused on the changing dollar/pip value. If a trade does not have clear and unambiguous exit criteria/levels/policies etc then it is difficult to be consistent with the results over time.

It is only by consistent application of one’s trading criteria that one can eventually judge if it is producing a positive or negative return. Constantly overruling the rules will always nullify the conclusions.

But you need sufficient available and affordable funds to carry through the possible low periods in order to get to that point of evaluation in the first place! :slight_smile:

1 Like