I have just started trading (well spread betting) and I started with gbp 80 in november and now I am at gbp 600+; I am a newbie and I think i got lucky by being in and out of some good trades.
Now I am getting slightly nervous of taking new positions. I dont want to feel too cocky and open new/bad positions and at the same time I dont want to be scared and not open any good trades (i think i am over-analyzing new potential trades...)
How do you guys deal with this? any ideas?
I trade on breakout patterns and normally hold on to my trades until the pattern is broken.. thats it, very simple strategy..
mylin_m19 posted: I trade on breakout patterns and normally hold on to my trades until the pattern is broken.. thats it, very simple strategy..
Keep doing what you've been doing. Your fear of loss is preventing you from future gains, and I suspect this is because you might not have a clear money management plan. A sensible stop-loss and trailing-stop strategy will give you the confidence of knowing potential losses 'before' you enter a trade, plus help you secure breakeven and systematically lock-in accrued profit as a trade progresses.
Hi Gary, I do have a stop-loss at the moment but it is sufficiently far from the price level, it prevents me from going in a loss but I dont want to loose the accumulated profits. How do i decide where to place my stop-loss? Thanks,
i guess u need to lose some trades n practice how to handle that emotionally, since eventually u will face some losses, but the idea iits not preventing losses, but its only how to minimize losses...
to give u a general idea about how to place ur stop-loss... when u decide to enter a trade, u can use closest support n resistance levels, which in ur case the boundaries of the shape or the pattern which already broken out signaling ur entry...
make sure to aim for 2-1 risk-reward ratio... so that if ur win ratio was only about 34% u will break-even,,,
You have made a good work and i tell you congratulations. From what i can read in your post, i think that you are a new trader.
Well your fear might lead you directly to a margin call and indeed you should deal with it very seriously and carefully.
These are some of the most important reasons for fear while trading :
1 - Not having a clear and pre tested strategy. What i mean here is that you need to have a written strategy. 2 - In case you have a clear strategy, then you just simply don't trust it. 3 - I think that you don't have a trading plan ( like a business plan ) Which will tell you what are your targets and how you should achieve them 4 - One of the most important point is a money management policy. If you have a clear money management policy then you don't have to worry about the losses that might occur because if your R:R is 2:1 or higher, then you can lose 50% of your trades and will still profitable ( You should know that making 1 to 2% a month will put you at the high of the trading industry) 5 - The problem might be the confidence in yourself. You might lack confidence in yourself and you should work on this point.
N. B : If you don't put stop losses, you will get a margin call and you will make of yourself a minnow so the sharks can eat you. Why i am telling you so ?? Just remember the 7 July 2005, The terrorist attacks on london . The trading statiosn stopped working and nobody was able to close the trades which resulted in a lot of marging calls while those who had a stop loss, it was triggered. Remember the EUR/CHF ( november 2011 ) 1200 pips in just 1 minutes, those who had not stops, got killed. Always use stop losses and not very tight so the big sharks don't hit them.
Watch out when you trade and don't risk more then 0.5% on a trade as you are a beginner. Forget all the hype and scam of the get rich quickly and manage your account as pro.
Say to yourself that having an account that is making between 12 and 15% a year with a drawdown of no more then 5 to 7% is extremly excellent and having such a record for only 2 years can make you get hired in the best banks and companies in the world.
Thank you ! That is really helpful. I am doing things very differently.. Sorry for giving a detailed version but just want to know if my strategy is correct well workable...
1) my starting capital was 80 pounds - I decided to trade currencies with low movements such eurgbp, usdcad, audgbp.. I put on a trade with stop-loss at of 40 pounds simply using DMI/ADX - in the event of loss I would have lost 40 pounds
2) That trade became a winning trade and soon I was at 40 plus total capital at 120. I put on another trade in the same currency with a loss of 40 pounds again and shifted my other stop-loss up 40 points - in the event of loss I would have still lost 40 pounds.
3) That trade became winning trade again. So I put on another trade and kept doing it until I had a net min profit and then I stopped putting new trades I just started shifting my stop-loss and locked minimum profit.
4) Then I put on a new trades on some other currency and did the same using dmi/adx. I was lucky enough to be right this time too. So I put on new trade again. So i am currently trading three currency pairs.
I might loose my current profits by if trades hit their stop-losses (in which case i still make profit but not as much I have currently). For example if my stop losses are hit I will be at 250 from current 600 but still up from my starting capital of 80... I dont want to move the stops closer because then I might lose the future profit potential. How do I decide when to take profits or when to let the profits go... as my profits are constantly moving. Hope this is clear?
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