if your account balance is $1000 then for instance you open a positon of size say $20,000 ($2dollar pips) then your position leverage is 20:1, that is the position is 20 times your balance (20*1000=$20000).
Really the lower you can keep this leverage (it is your own choice when you open a position) then the less risk you are exposing yourself to. This leverage is true leverage and has nothing to do with the leverage the broker gives you which is basically your deposit for opening the position ie 100:1, 400:1
You could have just said “Control your risk management”. Adding in “Control your leverage” is redundant. Risk management encompasses position sizing, which encompasses leverage. It’s all one happy thing.
So for example, if your going to risk 1 dollar, you better have the chance of making 2, and the probability of that happening better support it…
You’ve got the probability part right, but saying you need to have at least a 2:1 reward/risk ratio is one of those “truth” things you were talking about earlier.
the statistics are 95-98% of traders blow their account and quit in their first 6 months, the other 5-2% more often than not have actually done the exact same thing except they were persistant and determined to reach their goal and accepted their losses treating them as a learning curve which will pay dividents in the near future.
some other keys to success besides the obvios of finding a good system and good money management…
as you say persistence an determination despite setbacks
starting small enough that losses don’t crush you is a good thing. had I started big, the early losses would have discouraged me enough to give up completely.
Learning from someone who is proven succesful and not one of the 95-98%
Doctors have an oath, ‘first do no harm’ Forex should have something similar… ‘first controll your losses’ I try to get my stop loss to break even as soon as possible within reason and trail it after that and at least prevent a loss, that has helped.
‘Despite the impressive Superior Master title… where did that come from? I’m still a noob but determined not to be one of the 95%’
"These are my comments, I’m not saying they are right, its how I feel, and at the end of the day, I can still pay my bills… and put food on the table, and all that other stuff… above is what I believe, you can have your own opinion… I hope this helps some new people out there… "
I was in no way gloating with the fact I’m in the 2% or trying to convince you … I couldn’t care less what you think … just trying to help out those who might not be, and the fact that you feel the need to tear into me for doing so… well, at least I was trying to open some eyes… due to the attention the post has gotten, thank you for making it possible.
Someone had to say it, and well I got the balls… if your losing, don’t be bitter, you need to re-look at the approach … because your crazy , you keep doing the same thing over and over again expecting something different to happen…
[B]Talon:[/B] Yes you are a Superior Master Contributor & Member [B]to/of the FORUM[/B]…not as a trader…(so many seem to get that twisted…lol.)
I agree with you that too many newbie traders start out with too big a bankroll from which to truly learn on. So when they lose it, they get totally discouraged and give up. That I believe is what the 95% failure rate is derived from.
How many times did Thomas Edison (favorite analogy in personal development curriculum…lol) fail before he succeeded in getting the light bulb working? Many! So was he ever considered part of the 95% of inventors that failed?..he would if he had given up! But he didn’t and eventually became successful.
One thing I observe about many of the 5% traders that are currently succeeding and then return to the newbie arena aka forums, is the tendency to impart these little pearls of wisdom that took them years to learn, and think we will miracously stop making the mistakes that will eventually make us successful (as long as we don’t give up).
[B]Forexgroundworks:[/B] So I don’t think we’d hate you for trying, but it’s more like you’re talking down to us in a way that is perhaps over many of our heads… (like position leverage). That then tends to lead to misunderstandings and overall general unpleasantries.
I’m sorry, so many people I run into think their leverage is 500:1 … after I while, I just assume that people do since the vast population seems to think that is the leverage that they are taking/using…
I understand you don’t and I think its great that you know what it is, you probably get the same questions I do about 500:1 leverage … hehe
No can’t say I do (get the same questions about leverage)…lol. But I do see a lot of posts on the matter so I understand it’s something new traders have a hard time wrapping their heads around, not to mention there are many different ways of looking at it…which way clicks for one, won’t for another especially since it’s often a totally new concept for them to begin with.
The problem is is that people in general don’t look further than the end of their noses to find all those threads, and then they post another thread asking about it…arrgh!
Assuming (you know what they say about that word) on a forum is dangerous to one’s success in relating/relaying their message.
This makes a LOT of sense and puts a lot of things into perspective. I’m still only in the demo phase, but when I got a winner I pat myself on the back for following my system and seeing the trend move the way my indicators told me they would…
But when I got a loser, I will spend hours looking at the chart…on multiple time periods, look at the news, etc…try to figure out why it didnt do what I expected it to do. I will spend probably 10 times more time analyzing losing trades than winning trades.
I’m going with Ichimoku, so there are THAT many more variables to consider too…great post.
yea 95% but that includes starters and A LOT of noobs and the amount of people engaging in forex is on the rise and some people just dont understand it and they quit
Leaving aside the obvious doubious nature of your comment re PC you are of course correct. Most pro traders are men. I don’t know why this should be?
On a trading floor its essential to have a healthy ego. Most pro traders are in fact Alpha males. You need strong belief in yourself when trading a multi $M account or you could never execute a buy/ sell trade.
Pro traders look at both sides of the coin… what they did right and wrong and keep a detailed log of each and every trade. It helps to make notes on as much detail as possible about the circumstances of the trade for future reference when a similar set up comes around again. Also if it turns out to be a ‘pants’ trade you can at least go cap in hand to the boss and justify your thought process for the losing trade.
