I’ve been trading live for about 4 months now, I took this decision because I had achieved some consistency trading on a demo account for 6 months - over 90% of my trades were profitable. I attempted to trade the demo account as if it were a live account: using proper money management rules, sticking to my plan, etc; other than becoming familiar with the trading platform, nothing I did on demo really prepared me, psychologically, for live trading.
I opened a micro account with a few hundred dollars (money that I didn’t really want to lose, but it wouldn’t be an issue if I did) and tried to replicate the consistency I was achieving on demo. I tried to trade in exactly the same manner as I did on demo, using the same parameters, but to move from 90% winning trades on demo to 90% losing on a live account was quite a shock - obviously something was different! I’m still in the process of identifying what has changed (multiple factors, and it’s nothing to do with my broker) and slowly getting some consistency back. I’m still learning!
Don’t get complacent and think you know what the market is going to do, because it will inevitably do the opposite, and YOU WILL GET BURNED, as I did! The most annoying thing is to watch a trade that you have made a considerable loss on achieve a profit had you stuck strictly to your plan!
If your trading plan is working - STICK TO IT! If it’s not working, modify/change it until it does. The market will change periodically - you need to modify your plan to accommodate the change.
Don’t be greedy, take a profit when you can, a small profit is always better than a loss. Losses are really easy to come by, profits are not, at least for the relatively inexperienced trader.
Don’t stay in trades too long in the hope that you will achieve a much greater profit, especially when day-trading - the trade will inevitably reverse at some point. If you miss a 100 pip move, don’t get hung up on it, you can feel pleased that you have already taken a small profit and can be planning your next trade.
You will only really know how you will cope with the possibility of losing money when it actually happens. If trading fx is your chosen path, then prepare well and start to trade a live account when you feel you’re ready. There are no shortcuts - you need to put in the time, just accept it.
Use rigourous account management rules (as many on babypips and elsewhere have said) - there is something quite comforting about watching a trade lose and knowing that you only have 1% of your account riding on it.
If slippage makes a difference to whether your trade is profitable or not, there is something wrong with your trade.
The most valuable lessons I have learned so far have been about what not to do. I write these down and display them prominently so I am not tempted to repeat the same mistake again.
The way to success is to compound your profits - watch your account grow exponentially. It makes little difference to your capital at first when you’re only trading a few hundred dollars, but calculate what consistent profitability would mean over one, two or five years, you will be amazed.
Make use of the wealth of valuable free information in the Babypips school and from the many contributors to the forums. Sincere thanks to all who have contributed to this most valuable resource.
Lastly, a few words about ICT who most will know provides one of the most definitive educational resources on the Babypips website. ICT periodically receives (what I perceive to be) extremely unfair criticism about his methods, motives, etc. - I’m sure ICT doesn’t need me to defend him, but I have only ever found him to be generous in the extreme and his materials enlightening. I cannot imagine how he finds the time to put together all of the videos, but never once have I been asked to provide anything in return. IMO he is as genuine as they come, so a special thank you to ICT.
Merry Christmas to all on Babypips & a very happy and profitable 2013.
