When you lose a trade

1- Do not increase your trade size after a loss.

2- Take responsibility for the loss.

3-Train your reaction to losing trades. Don’t be too harsh on

yourself

4-Accepting that trading is an activity that requires a certain amount of time and effort,
but doesn’t always provide something to show for them.

When you win a trade

1- Do not increase your trade size after a win.

2- Stick with what’s working but be aware that it won’t last forever.

3-Maintain a critical eye on what’s happening.

4-Make regular withdrawals from your profits.

The beauty of compounding is that you can turn a small trading account into a big one. Of course, it’s not
an overnight process, but by continuously reinvesting some of your trading profits, you will exponentially
increase your account over time.

“It was clear to me that other people could trade for a living, and if it was possible
for other people to do it, then I could persevere long enough to figure it out.”

Becoming an expert in any field requires a tremendous amount of learning and practicing. Throw
in the psychological aspects and you’ll see why most people don’t make it as traders. However,
the good news is that if you have the perseverance, trading for a living is a reality for you.

“The goal of a successful trader is to make the best trades. Money is secondary.”

Again, successful traders don’t get too excited about wins and losses. Sure, everybody wants to
make money, but successful traders know that the best way to get there is to make the best
trades.

“A clear vision, backed by definite plans, gives you a tremendous feeling of

confidence and personal power.”

We always hear about how important it is to have goals in life. On the other hand, few people
remind us to have well-defined plans that provide guidance along the way. Creating a trading
plan is one of the most essential aspects of successful trading.

“The successful warrior is the average man, with laser-like focus.”

Most full-time traders are average people who decided to abandon their professions and pursue a
completely different lifestyle. They were lawyers, doctors, teachers, or anything in between.
They became successful in trading because they focused solely on their goal and slowly mastered
every necessary component.
What is trading psychology?

Put simply, trading psychology refers to the emotional mindset of traders - whether that’s feeling
composed or anxious. While trading, it’s crucial you remain calm, patient, focused and disciplined, not
letting your emotional state affect your work.

Emotions like greed or fear can play a huge role in the trading process, and can easily get in the way of
making profit - for example, greed causing you to take too many risks, or fear preventing you from
following an upwards trend.

Your mindset is as important as your trading strategy itself, so it’s important to keep an eye on this as
you work.

9 trading psychology quotes

Want some words of wisdom from the experts? Here are ten trading psychology quotes and some key
things to remember while trading…

“Money is just something you need in case you do not die tomorrow. Let this be a reminder for you not
to obsess over profits and losses. In whatever you do, strive for enjoyment, focus, contentment,
humility, openness... Paradoxically (and as an unintended consequence) your trading performance will
improve significantly.”

Yvan Byeajee

“A peak performance trader is totally committed to being the best and doing whatever it takes to be the
best. He feels totally responsible for whatever happens and thus can learn from mistakes. These people
typically have a working business plan for trading because they treat trading as a business.”
Van K. Tharp

“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot
more people making money trading… I know this will sound like a cliché, but the single most important
reason that people lose money in the financial markets is that they don’t cut their losses short.”

Victor Sperandeo

“In order to succeed, you first have to be willing to experience failure.”

Yvan Byeajee

“Learn to take losses. The most important thing in making money is not letting your losses get out of
hand.”

Marty Schwartz

“When you learn to let go of the need to be right, being wrong gradually lose its power to disturb you.”

Yvan Byeajee

“Reaching any goal in trading requires specific domain knowledge and technical skills. But then, after
that, it's all mindset management. Yet most people ignore that —they automatically think they have
that last part all figured out, and it's a mistake.”

Yvan Byeajee

5 day trading psychology tips

So - how can you manage your emotions while trading? Here are some top day trading psychology tips
to help you…

Monitor your emotions

It’s important to recognise when you feel an emotion creeping up on you to avoid it impacting your
work. In the face of loss, how do you react? What calms you down if you’re feeling frustrated or worried
about a particular trade? Understanding the emotions that usually follow making a loss and learning
how to deal with them in the right way for you are essential to managing - and strengthening - your
mindset.

Learn from the experts

The more you trade, the more you will become familiar with your own emotions and how to manage
them. Whether you have years of experience under your belt or are just starting out, there are always
things to be learned from other traders - especially the way they manage their emotions. If you know
any traders with years of experience, ask them: how do they deal with losses? How do they manage
difficult emotions when trading?

Be patient

Have you ever found yourself in a losing position, selling the trade and making a loss - only to find that
the price starts to rise again and you miss the entry point? This is a familiar situation for many traders -
and patience plays a key role here. Impatience can cause you to enter or exit a trade at the wrong time,
therefore increasing your likelihood of making a loss. So: don’t act on impulse - wait for a setup to fully
form before you trigger your trade!

Don’t fear

We know this is easier said than done! Fear, much like greed, can easily cause errors in judgement and
can increase the risk of loss. Losses are an inevitable part of trading and the longer you trade, the better
you will become at managing your emotions in the face of loss - so practise is essential. Don’t let fear
shape your trading decisions - this is what your strategy is there for!

Trade for the right reasons

It’s hugely important to question your motivation for trading. It goes without saying that everybody
hopes to make a profit - but greed is a key thing to watch out for! Greed can be the sole reason behind
severe losses, so make sure you’re realistic in your expectations when you’re just starting to trade.
Making profit can take a long time - so you’ll need plenty of patience.

Successful traders often have a lot of different things in common - but the right psychology is one of the
most important things in this list. It’s no coincidence that those who make winning trades are often
those who remain disciplined and calm when trading.

So - what traits do these traders usually have in common? Find out four common psychological traits
shared by all successful traders below…

4 Psychological Traits Shared by all Successful Traders

1. Patience

Patience is crucial to any trade. Rushing into trades as soon as you see the market move up or down is
usually bound to result in losses. So - how can you practice this?

Make sure you wait for confirmation that the market is moving in a certain direction (by drawing
support and resistance lines or switching time frame from the daily to the weekly) before placing your
trades. Sudden moves are usually motivated by fear or greed - definitely emotions to avoid on MT4!

2. Calm

Staying calm is very closely tied to staying patient. Stay relaxed when trading: panicking can often lead
to losses, whether you’ve just made a winning trade or a losing one.

Made a winning trade? It’s crucial to stay calm in order to keep those profits - you might experience a
winning-streak high and then rush into other trades. If you’ve made a loss, it’s also equally crucial to stay
calm: panic might involve placing more trades quickly in the hope of making your money back - but
you’re more likely to lose more this way.

Remember: sudden moves equal losing trades. Stay as calm and as rational as possible.

3. Discipline

Trading famously takes discipline. When you began trading, you likely made a (mental or physical)
trading plan that worked for you - so stick to it!

If you made plans to never lose more than 3% of your capital in a day, then stop if you find yourself
making a series of losing trades taking you near this level. Stick to your trading plan and you’ll find the
discipline helps you enormously.

4. Acceptance

Sometimes an important part of trading is accepting your losing trades. When you do make a loss, it’s
important to use it as a valuable lesson. With a calm head, assess the situation to see how you could do
better next time and learn from your mistakes.

Ask yourself: what could you have done differently? How should you restructure your trading plan? How
can you prepare yourself for losses in the future? Should you change your trading plan? Accepting the
loss will help you to improve your plan and strengthen your trading mindset for next time.

These are the four psychological traits shared by traders!

TRADER MONEY DIARIES:

Q1. What is your income from trading?

My income from trading is not really huge and is not really a concern to me at the moment, because my
account size is very small and I'm making between 1to 5% monthly. The most important thing to me
now is to get the trading process right, from planning and risk management to my psychology.

Q. What did you earn when you first began trading, and is that different now?

I lost everything when I first began trading but now it's much better as I'm making profit and never lose
any funds.

Got no capital to start trading with? No problem - here's how to start trading with no money>>
Q. Do you earn commission?

Yes, I do earn commission from my personal broker.

Q. Do you work full-time or part-time?

I work full time.

Q. What are your savings goals?

My savings goal is to save at least 60% of my income.

Q. How do you manage your finances as a trader?

The first thing I think about is my subscription fees for about 3 months. Once that is taken care of, I'm
not under any pressure and I'll have time to take quality setups to make profit.

Q. How do you decide how much to risk per trade?

I have a 0.5 to 1% risk rule per trade depending on the trade setup.

Want to know what traders make working for a big bank? Read our Money Diaries with Jessica here>>

Q. How do you decide how much to risk per trade?

My risk management plays a very vital role in my financial management. I tend to allocate fewer funds
when the probability of my setups is low and vice versa when am ok with the probability - it's more of a
gut feeling.

Q. What do you think is the biggest misconception about money and trading?

The biggest misconception about trading is the get rich quick syndrome and the social media hype by
some traders about their lifestyle. A big myth is the idea that the more money you have in your account,
the more profit you'll make, which is absurd if you don’t get the process right.

Q. What are three pieces of advice you would give to a new trader about money expectations and
money management?

Don’t expect to make any money but rather focus on the process

Don’t risk what you cannot afford to lose

Always be within your risk parameters

TRADER MONEY DIARIES: ----II

What is your income from trading?

My income from trading forex is around $100 - $500 - not regularly per month. If I have enough time to
trade full-time, I believe my trading income can be consistent or even increase.
What did you earn when you first began trading, and is that different now?

When I first started trading 10 years ago, I didn't earn anything - instead I lost my entire $100 capital in
less than an hour, at first OP. But it happened in 2009 when I was just getting to know forex for the first
time and had no trading knowledge. Now that's all different: I can manage my account very well, ten
years without getting hit by MC, never getting a stop-out and I'm also able to manage the risk of every
trade.

Do you work full-time or part-time?

I am currently trading part-time, more as a "trading for skill" rather than "trading for living". To live and
meet daily needs, I still rely on other jobs.

What are your savings goals?

In terms of the financial aspect, my savings goal is to have enough money to finance all the needs of my
big family. In terms of conditions and professions, my future goal is to become a Fund Manager in a prop
firm and also a "PAMM Trader" in forex brokers.

How do you manage your finances as a trader?

As a trader, I manage my finances by depositing 10% of the money I receive from other jobs into my
forex account. I'm not worried about losses or total loss of capital, because I already know how to trade
forex properly.

How do you decide how much to risk per trade?

I risk 1% - 15% on each trade. Only single OP until the order hits TP or SL. The risk of 1% - 15%, in my
opinion, is not too small and not too big, because it's adjusted to my deposit which is not too big. If the
order hit SL, I can accept that money loss and if I get profit, it's proportional to the amount of capital.

How does your risk management play a part in your financial management?

It is very important to manage risk. I learned this the hard way 10 years ago when I lost all my money
because of trade without calculating risk, opening orders only because I was sure of the direction of the
trend, which turned out to be a fake trend, which in turn meant I ended up losing my capital.

The importance of risk management is to avoid bad events like this. Gamblers may be familiar with this,
but because I have long-term plans in forex, and want to become a Fund Manager at a prop firm, then I
have to use a different strategy and technique than most other traders.
What do you think is the biggest misconception about money and trading?

I see a lot of traders on social media showing off their profit results. In my opinion, money can be
obtained from anywhere, including other jobs outside of forex, but when it comes to forex trading, the
best thing is when we can manage risk well - and in the end we'll get to profit from trading.

What are three pieces of advice you would give to a new trader about money expectations and money
management?

Some words from me for novice forex traders:

1. Invest your time with trading knowledge - not your money, and do not give your money to someone
else to be traded for you.

2. Use a demo account to develop skills. If you have traded with a live/real account and you're uncertain
about market/trading conditions, just go back to the demo account to learn again.

3. If you want to work with a prop firm, focus on increasing the "Sharpe Ratio", not the profit money
value.

TRADER MONEY DIARIES: ----III

What is your income from trading?

I earn anywhere from $20,000 to $25,000 in one or two months, but it all depends on how well I am
doing. For example, if I have a slow month, then my income for that month will likely be lower than
$20,000.

What did you earn when you first began trading and is that different now?

I began trading in 2011 and earned about $600 per month. Some of you may be surprised to read this,
but there were far fewer traders in my cycle and much less information available to us back then. I am
from Kenya, you know! I've been able to sustain that level of income because I've stuck with it and
learned from my mistakes. A lot has changed in 10 years! Now there are so many more traders out there
working hard trying to learn as much as possible about how to trade better… that's really helped drive
the industry forward for everyone.

Do you earn commission?

No, I do not earn any commissions from trades I make. I pay spreads and buy and sell currencies based
on my analysis of the market and economic conditions. However, some other forex brokers and
institutions will offer you bonuses from time to time. Some forex brokers even offer an education
package that allows new investors to trade with no fees for a limited time to help them develop their
skills. Well, I can say I have benefited from these!

Do you work full-time or part-time?

Forex trading is not a full-time job as such, but rather a passive income source that I find myself doing.
The best part about forex is that it doesn't require much time, and it doesn't take much time. As far as
time goes, it takes me less than 15 minutes per day on average to review the charts. The time varies
depending on the market conditions at that given moment.

Sometimes I'll spend more time analysing charts, sometimes less. It really depends on how the market is
moving at that moment. While I do have other sources of income as well (i.e., writing), my primary
source of income is still from my accounting job.

What are your savings goals?

Savings goals will depend on your situation, however, saving at least 30% to 40% of my monthly net
income works well. I want to have at least six months of living expenses saved up, enough to cover any
emergencies that may arise. Second, my long-term goal is to save up enough to create my own business
doing something I enjoy doing. The third thing I want to do is start creating a passive income stream so
that I never have to worry about money again. These are my big-picture goals.

How do you manage your finances as a trader?

A successful trader must keep track of several things, such as capital management, risk management,
and daily trading activities. I keep six months of trading capital in savings and have an emergency fund of
at least six months' worth of expenses. You never know what's going to happen, but I want to be
prepared for anything!

It is also critical to plan and budget your finances before, during, and after trading. The first step in
managing your finances as a trader is defining what you are trying to accomplish. This could mean
setting a goal for the number of trades or the amount of profit you hope to make. Deciding on your
trading objective will help you define how much money you need to risk on each trade.

How do you decide how much to risk per trade?

When you're just getting started, it's hard to know how much to risk per trade. You don't have a lot of
experience, and your trades might lose a lot of money.
To decide how much to risk per trade, I look at my account balance and the amount I typically trade.
Then I determine what percentage of my account balance I want to risk towards each trade and place
that percentage into the "Risk" field when creating a new trade. For example, if I have $10,000 in the
account and typically place $2,000 worth of trades, I would set the Risk field to 2%.

There is no one-size-fits-all answer to this question. Every forex trader has different risk appetites,
trading styles, account sizes, and expected return on investment. The general rule of thumb is that you
should risk no more than 2% of your account balance on each trade. The forex market is volatile, so even
a small amount can make a massive difference over time.

How does your risk management play a part in your financial management?

Risk management is an essential part of financial management. A key component of risk management is
managing the risks associated with trading. This includes managing brokerage account risks, market risk,
and dealing risk. Other components include monitoring accounts, position limits, and understanding
counterparty risks.

Risk management also involves assessing how much capital you have available to trade with and using
that amount wisely. As your experience level progresses, emotions begin to play a more significant role
in trading decisions, and risk management will become even more critical to your overall success as a
trade.

What do you think is the biggest misconception about money and trading?

The biggest misconception about money and trading is that it's a get-rich-quick scheme. It's not. This
business requires dedication, hard work, and an understanding of what you're doing. Trading foreign
currencies can be very complex, but the bottom line is that you're making money by buying low and
selling high. As long as you take proper precautions and use common sense, trading will work well for
you.'

Many people believe that to trade forex; they must first invest a large sum of money. This is simply not
the case. You can begin with a small account and gradually grow it, applying various strategies as your
confidence grows. Don't let the size of your initial deposit prevent you from trading! It's always a good
idea to have some working capital if something goes wrong and you're forced out of the market.

What are three pieces of advice you would give to a new trader about money expectations and money
management?
First, be realistic about your trading account size and how much you should risk on each trade. This will
help you avoid the emotional trading mistakes that many retail traders make, such as risking more than
they can afford to lose.

Second, be disciplined about entering and exiting trades based on your plan, and stick to it even when it
feels difficult.

Finally, a good money management strategy also includes having an emergency fund that you can draw
from in case of unexpected expenses or market losses.

Steps to Budget for Your Forex Trading Goal

Step 1: Work out how much you need to save

First, you need to determine how much money you are currently spending. That is your subscription fee
as well as your trading capital.

Second, determine how much money you need to save. This could be because you're saving for three
months' worth of trading capital or a set amount to deposit into a trading account.

Third, make a plan for how frequently and for how long you'll have your money available. Will you be
trading every day? Is it only on weekends? A couple of hours here and there? All of these factors will
have an impact on your trading strategy and account balance.

Make your budget work for you by getting a clear picture of where the money is going and then making
adjustments as your financial needs change. It's important to factor in all costs, including interest, fees,
taxes, and an amount for unexpected opportunities that present themselves. Begin by listing all current
and future anticipated expenses. Determine how much money is genuinely available for saving each
month.

Step 2: Write down your priorities

Pick three or four of your biggest priorities, and rank them in order of importance. Now prioritize the
ranking, choosing the one thing you'll do first.
The key to making any budget work is knowing what you need to spend money on and when. Think of
your ideal budget like a map: you're charting your course in real-time by making tradeoffs among
different priorities.

Each decision moves you further down the road toward your financial destination. So, which tradeoff is
right for you: Spend more now on a big-ticket item or save more for later? Think about this for a minute.

Want to know how much money traders really make? Here's your daily dose of inspiration - see the
average forex trader salaries here.

Step 3: Set realistic milestones

To budget effectively, it's essential to set realistic goals and milestones. Begin by determining how much
money you need to save per month to have the funds ready in, say, six months. Keep in mind that you
will need money for living expenses during this time. If possible, try to build some cushion into your
savings not to need every last penny right away.

Vague goals may not see the light of day. Instead, state how much money you need to save each month,
what steps you'll take to get there, and when you expect to achieve your goal. A realistic plan with a
timeline is essential to managing your budget. Split up goals into short and long term, divide them into
spending categories, and track them throughout the week.

Make sure it's something you can do, not just something you wish you could do. Then make plans for
action and stick to them! Another idea is to have some form of automatic savings set up, so you won’t
be tempted to dip into your savings in your current account.

Step 4: Cut down costs

Finding ways to save money on your budget can be a challenging task. There are many cases in which we
pay for certain subscriptions that we have not used for some time. In this situation, you should check if
the service you have been paying for is still necessary. This can help you discover a way to save up quite
a lot of money for your forex goal.

For example, could you cancel your Netflix subscription for a few months to put this money towards
your forex trading goal?
Sometimes you need to take some time out to consider what you value. Use this time to reflect on what
is essential and how this fits in with your overall goals. Do you need your monthly magazine
subscriptions, or are they a waste of money? How much do you spend on takeaway food? Can you cut
back? Cancel services you don't use. By identifying what you really need, you'll have more money to
save for your forex goal.

Once you've broken down your expenses, you can then begin to cut costs to save some money. For
many of us, the most significant expense is usually rent or housing. While you might not be able to move
for less rent (though you could!), take a look at ways in which you can reduce your costs. Going down
your list of more minor expenses, consider whether or not that item is essential.

Productivity is the key to success - so how can you remain productive while working at home? Here's a
list of five important tips to help you stay on top of the markets while working remotely. Simple!

5 Tips to Trade Remotely

Tip #1: Create an environment that inspires you and energizes you

If you're going to work from home, make sure you create an environment where you're comfortable and
inspired. This means creating a space where you can focus on your work. If this means having a home
office or setting up a designated workspace in a separate room in your house, then do that! If it means
buying some plants for the windowsill to help boost productivity, then go for it.

Your desk should be the right height for your sitting posture. Our bodies need to be in the best position
to feel comfortable for long periods. Ideally, your chair should support your lower back and allow for
movement.

Working from home might mean that there's not much natural light coming into your space during
winter months (or even during summer if it's dark at 5 pm). Try to bring more natural light into your
space; open blinds during the day and use lamps at night if needed. Natural light helps increase energy
levels, which is important when working remotely!

Tip #2: Practice time management

Time management is critical for trading, and you need to set a schedule for yourself. This will help you
stay on track with your other daily tasks and ensure that you have enough time to do everything without
feeling stressed or rushed.

It would be best if you also created a routine to stick to your schedule and keep yourself organized. For
example, if you are planning on trading once per day during regular business hours (9am-5pm), try
setting an alarm at 8:30am every morning to remind you when it’s time to begin working on your trades.

This way, even if life gets busy or stressful outside of work hours, there won’t be any surprises when it
comes time for making trades later in the day.

Tip #3: Try to stick to regular routines

Sticking to a routine is probably the most important thing you can do when trading remotely. If you’re
not disciplined, it’s easy to get distracted and forget about your goals, negatively impacting your career
as a trader.

Trading is a job, not a hobby, so treat it as such. If you’re trading remotely, there will be days when you
feel like the whole world can wait—and though that might be true, it isn’t beneficial for your trading
account or career growth. Make sure that you are in the right frame of mind when you trade so that
distractions don’t get in the way of your time or performance on the market.

Tip #4: Make sure your internet connection is fast and reliable

Your internet connection will be an essential component of your trading strategy. It's important to know
that you have a fast, reliable internet connection.

To ensure this, test your internet speed before getting started by using one of many online websites that
can test connection speeds. If possible, use wired connections instead of wireless ones since they tend
to be faster and more reliable.

Tip #5: Set up alerts on your phone to avoid missing important news events

While trading, it's important to be aware of what is happening in the global markets. While you can
check your smartphone and other devices for updates, it's crucial that you set up alerts on your phone
so that you don't miss important news events.
You should also schedule breaks from the screen. Research suggests that we take a break from our
screens after 50 minutes or so without fail; otherwise, fatigue may set in, leading to poor performance
later on. Finally, set up an alert for when your position has been open for a certain amount of time—this
will help prevent overtrading as well as potential losses due to market volatility.

QUIZ: IS TRADING THE RIGHT CAREER FOR YOU?

Quiz time! Do you have a passion for trading? Are you willing to work hard to accomplish your dreams?
Do you want to be financially free and independent? You're probably in the right place if you said yes to
all of these questions. But let's dig a little deeper. Answer the following questions as honestly as you can
and then see if trading is really for you…

Is Trading The Right Career For You?

Do you consider yourself a risk-taker?

No, taking risks is not something that interests me.

Sometimes, depending on the situation and my mood at the time.

Yes, I like taking risks because my reward will be greater if I win, and I have a good history of winning big
when it counts.

If you're the kind of person who feels anxious at the thought of taking a risk, trading may not be for you.
While it's possible to get started with as little as $500 and work your way up from there, forex is
inherently risky, and the more you have in your account, the more you have to lose. With that said,
forex offers a fantastic opportunity for making money on investments, but only if you can tolerate risk
and understand how to manage it.

The most important thing for me when I trade is...?

Making as much money as possible.

Learning how the markets work and how to trade so that I can make money in the future.

That I see whether trading is suitable for me before I invest too much time or money in it.
The best way to approach trading is with caution. There's no reason to rush into anything, especially if
you don't have the resources available or aren't sure that trading is suitable for you. Take your time
learning the basics and see how things go before investing too much time or money. After all, we all
have different goals and expectations when it comes to trading — some people want a second income,
others want to call it a career, and some may wish for a hobby; this will affect things like time frames
and risk tolerance.

Do you want to make quick cash?

Of course - who doesn't?

Sometimes -I would like to buy some luxuries here and there.

No, I prefer long-term investments.

Forex requires patience, discipline, and dedication. This is not a get-rich-quick scheme. You won't be
making millions in one day or even one year. If your answer was to grow as an investor and make money
over time, then forex is for you!

Can you lose money and keep your cool?

Not really. It just makes me want to take more risks to recover my losses.

Sometimes. I try to stick to my trading plan, but I don't always succeed.

Yes, no problem. I can resist the temptation to overcompensate for losses.

If you are easily bored and like quick-fix solutions, forex trading may not be for you. Trading requires a
lot of discipline and patience as well as self-control. You need to maintain a cool head and will not be
successful if you allow your emotions to get the better of you.

How would you describe yourself?

I tend to react strongly to bad news and often lose my temper.

I am generally patient, but I can get upset when things don't go my way.

I am a patient, level-headed person who never gets angry or flustered.

Successful forex traders must be able to maintain a balanced mindset in the face of losses and profits
alike. They cannot get carried away by emotion when things are going well, nor can they allow
themselves to panic when their trades turn against them. The markets will test your resolve over the
trading week.

Do you like to follow a plan?

No, because I can only learn when I make mistakes.

Yes, as long as it doesn't get in the way of my whims and fancies.

Yes, because I want to increase my chances of success by being consistent.

Understanding the importance of following a plan and seeing it through to the end is one of the key
recipes for trading success. Successful traders create trading plans and stick with them—they don't jump
around from trade to trade with no plan. If you find yourself making trades on a whim, it could indicate
that you're not ready for trading just yet.

What are your goals for the next 5 to 10 years?

I want to be wealthy enough that money isn't a concern in 10 years, but I don't know if trading is the
only way.

I want to supplement my income and make some extra cash trading on the side.

I want to be able to trade full-time and be financially secure in five years.

This one is a no-brainer for those who have been trading for a long time, but it might be a more difficult
question to answer for those just getting started. The simple fact is that if you aren't 100% committed to
trading, it will be hard to make it as a trader. However, that doesn't mean you should quit your job and
go all-in on forex trading right away. Many people find that they can trade on the weekends or evenings
after their day job and still make good money while keeping their 9-to-5 career secure.

Which strategy is right for you? See what kind of strategy suits your day job or your personality here>>

Do you enjoy research and analysis?

No, I'd instead just get things done.

Sometimes it's necessary.

Yes, I'm very analytical.

Trading is a highly technical profession. You'll need to spend a lot of time studying market trends,
learning how to read charts, and formulating a personal trading strategy. There are tools online that can
make this process easier, but you'll still need to put in the time and effort.

If you answered...

Mainly A: Trading may not be for you at this time. You may want to take a closer look at your career
path before committing any further time or money to trading education or courses.
Mainly B: Trading may suit you, but additional education or practice is required before becoming
consistently profitable.

Mainly C: You're definitely on the right track! You can become a successful trader with consistent
practice and dedication within months.

4 Essential Risk Management Tips

Risk is an essential part of any trading plan.

Risk management is an essential part of trading smartly and effectively - and should form a substantial
section of your trading plan.

Managing your risk well will be beneficial in the long and short term: you’re less likely to blow your
account; you’re more likely to maintain a healthy mindset, and your trading journey will likely last longer
as a result.

Aside from psychological elements (such as monitoring your mindset) there are plenty of practical and
technical measures you can take to make sure you’re managing your risk correctly - including never
moving your stop loss order during a losing trade to setting a realistic risk-reward ratio.

4 Essential Risk Management Tips

1. Set a stop loss order - and never move it

The first step in managing your risk is setting a stop loss order. A stop loss - an order placed to buy or sell
once an asset reaches a certain price - is a key part of trading as it will help you to minimise and manage
your losses.

But make sure you’re strategic here: choose a stop-loss percentage that allows the market to fluctuate
day to day while preventing as much loss as possible. For example, setting a 5% stop loss on a stock that
has a history of fluctuating 10% or more in a week would not be the best idea - so make sure what you
choose is realistic, both for you and the markets.

However, it’s not enough to set a stop loss - you have to stick to it! This is where the real test of risk
management comes in.
If you’ve ever found yourself in a losing position and found yourself considering widening your stop loss,
you’re not alone - but remember that stop losses are there for a reason!

It can be tempting, we know, to think ‘I’m already losing. May as well wait in the hope that the market
turns here.’ But this is a huge mistake! Widening your stop loss will only increase the losses you make.
It’s far better to take the hit as it is than let it run. Trust us.

2. Don’t risk more than 1% per trade

This is an essential part of risk management. How much of your capital you risk per trade will depend on
your financial situation, but it’s generally recommended that you risk no more than 1-2% of your capital
per trade.

Risking any more than 4 or 5% is considered high risk, so it’s best avoided if possible, as this can lead to
severe losses?

For example, risking 2% of your capital would mean that if you had $10,000 in your trading account, you
would not lose more than $200.

As with widening a stop loss, we know it can be tempting to risk more capital on a trade - especially if
you’ve lost a big amount on a previous trade and think that by risking more you can win your capital
back (or, equally, if you’ve won a big amount on a previous trade you might be tempted to try to make
an even bigger profit).

If you find yourself in this position, it’s a good idea to check your mindset and take a step back for the
day.

3. Set a 1:3 minimum risk-reward ratio

The next step: setting a realistic risk-reward ratio. Your risk-reward ratio measures the difference
between the profit potential of a trade relative to its loss potential - in other words, how much you’re
risking compared to how much you might earn.

For example, if the distance between your entry level and your stop-loss is 50 pips, and the distance
between your entry point and your take-profit is 150 pips, then you would be using a RRR of 1:3,
because you’re risking 50 pips to earn 150 pips (150/50 = 3).
So - what should your risk-reward ratio be? It’s a personal choice that will depend on your available
capital and how much you are willing to risk - but generally speaking, a good ratio is usually anything
greater than 1 in 3. In this case, you’d expect to win three times what you’re willing to lose.

4. Understand currency correlations

Currency correlation is the idea that currency pairs often move in similar ways - for example, moving in
the same or opposite direction over a period of time.

If you have multiple positions open - and each position consists of a different currency pair - you may be
exposed to risk. For example, usually, trading AUD/USD and NZD/USD is like having two identical trades
open because they usually move in a similar manner.

So you can see the problem: you may be unknowingly exposing yourself to double the risk. It’s essential,
then, that you understand how currency pairs move in relation to one another.

In order to avoid making this mistake: read up on currency correlation, make sure you’re aware of how
many pairs you’re trading at once, and in most cases, make sure you pick one out of two setups.