This should be an integral part of your trading plan but, just in case you omitted this from yours, here are some points to consider.
Partly encouraged by brokers or people selling trading courses, many newcomers enter forex trading with vastly over optimistic expectations. There are dozens of threads on here started by traders asking if they can make 25/50/100% return on their accounts per month. While its not impossible, its so difficult to achieve on a regular basis that setting targets like this is only likely to encourage traders to take unnecessary risks, and it only takes 1 big loss to blow your account. Remember, you’re still learning, it’s more important to still be trading tomorrow than to try and hit a made-up target today.
[U]Look at the big picture by thinking small[/U]
Lets say you have decided that a target of 100% per annum growth is achievable. That’s 8% per month, 2% per week, less than half a percent each trading day. How much of your trading account do you want to risk to hit this 2% a week target? I know one full time, successful trader, who risks 10% of his account per week to do this, split into 5 daily risks of 2%. He starts out on Monday placing his trades. If he hits more profit than his target, he then reduces his risk the following day. He doesn’t increase his risk if he falls short of his target, that’s just asking to lose money quicker. As he tells me, if he’s only looking for 2% growth a week, psychologically there is very little pressure to do this, so shortfalls can be brushed off. On the other hand, one good week can surpass a whole months target, which means 3 weeks of stress-free trading lies ahead.