[B]THE PILLOW TEST[/B]
[I]The following is an older piece that I wrote but well worth re-issuing.[/I]
I would recommend that traders take the “Pillow Test” to ensure they are able to appropriately handle a losing trade. If you feel you can put your head down at night and sleep easily without worrying about the result of a particular trade, than you pass the “Pillow Test” and should be in a good position to be able to deal with a losing trade. However, if you find yourself unable to rest your head on the pillow (and especially if you are using the pillow as a suffocating device), you have probably taken on too much risk and should significantly reduce your position size to the point where you can get some sleep. Losing is a part of trading and should be embraced. If a trader can not accept being wrong sometimes, then he is more inclined to be wrong all of the time. We all have lives outside of our work and need to be able to go home to our families and friends at the end of each day knowing that we will be able to focus on what really matters.
[B]Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
If you wish to receive Joel’s reports in a more timely fashion, e-mail [/B][B][email protected][/B] [B]and you will be added to the [/B][B]“distribution” [/B][B]list.[/B]
Visit the DailyFX Forex Stream for Real-Time News and Market Updates