It’s not a time to be a hero .
- Your trading results have been great
- Your trading results have been poor.
Either extreme result should not impact your decisions for your closing the week . Begin to be ready for the closing on the evening before. Evaluate all open positions Prepare a hedge strategy for all those positions that you anticipating carrying into the abyss of the weekend.
Traders have a tendency to believe in catch up and pile in when extremes of success or loss are rendered.
As the week end approaches you charts should again govern your decisions.
I notice that as things are going well for our traders they tend to get a bit loose with our use of margin . In our case we max our use of margin at 10% of our capital base . This week as it seemed for almost every trade we entered we were successful . Many of our trades entered in November as long term plays have now been closed with profit. But I noticed we forgot the dangers of margin use.
So this is written for us as well as any trader who allows euphoria to cloud his decisions.
Lets take a simple example to illustrate :
Assume a $100,000 account with a margin of 200:1 that has a conservative margin use of 10% of capital or in this case 10,000. So that allows you to enter trades for 2mm of currencies If your positions drop a total of 5% you are wiped out. 5% moves are rare but not without precedent.
If you are not hedging your positions and distributing your trades across a correlation that tends to act as a hedge as well, you are wasting time with analysis as eventually the market will wipe you out
At the week’s end bring your emotions into balance .You are never as good as you think nor never as poor as your performance indicated
At weeks end if you have had a 200% increase then thank the Forex karma and vow never to have that again as it was only that you were the gambler that laid a bet on 00 .
Slow and steady makes a professional trader. Leverage should be at a minimum
At weeks end review what you did right? Take time to find those things you did poorly. Ask your self , “Did I sleep well this week , Did I enjoy my life , my family, my faith , and my friends?
If you had no’s to any one of those questions , you career is not rock solid .
