HOW TO AVOID MARGIN CALLS FOR LIFE

HOW TO AVOID MARGIN CALLS FOR LIFE
I have noticed that most forex traders fail not because of the trades they take but often because they have not developed the traits required to make a success out of what they do. It looks like what most of us do is wake up in the morning, say a few prayers, rush to the computer, open our platforms, put up some indicators, place trades and start hoping that the market move in our direction.
Sometimes the market moves to our favor 10 pips…we start wishing it moves some more…then it moves 20 pips ….and we then conclude it will move more….then it moves 30….we still refuse to take it out because we are now over confident that it will move 40, 50,60 or even more.
But all of a sudden before we drink a cup of water the market has reversed all the profits and we are now in minus 40…Wow! What happened? Was there any news? We check to see if there was any news. There was no news. What happened? Maybe it’s the broker manipulation.
Ok we start hoping it will reverse and come back to give us profits. But to our greatest surprise it doesn’t. Instead the losses keep escalating. Eventually we have no other option than to close the trade at a minus…huge drawdown.
I know this picture aptly describes most of us who say we are trading forex. The problem is that this keeps repeating itself over and over until we get a margin call.
Without developing winning forex skills you will end up only wiring money to your brokers over and over without making withdrawals. There are four important skills necessary to make you succeed trading.
1. Having a trading plan
2. having a trading system
3. having a winning psychology
4. being a good risk manager
TRADING PLAN
Answer these questions. It will give you a picture of what I mean by a trading plan
• Why are you trading forex…that is what is your overall goal for trading forex.
• In the next one year what is your goal in forex. How much do you want to make
• What is your monthly target that will eventually add up to actualize your yearly goal
• Now how much do you need to make daily to get to your goals
My suggestions are set a realistic goal. Some people say they want to make 5000$ every month and there start up capital is just under 2000$. That’s not a realistic goal. Some say they want to make 100 pips daily. That’s not a realistic goal. A good idea is to begin with a small target of say 10 pips daily. Then progress to 20 pips daily
Some days will give you more. They will be ones that will make up for your losing days. This means when you take a trade and see 20 pips profit you lock it in and let the trade run so that at worse you will end up only with 20 pips for that day. This also means you will not place trades unnecessarily unless you see very, very, very good setups.
TRADING SYSTEM.
A trading system is a set of rules that make you take a decision either to buy or sell. Yes in this site and several hundred others you will read about several winning systems. But you must not follow anyone blindly. Your job is to study as much as you can. Test them and if possible use your own settings and Tfs and make it your own invention.
One thing that you must know is that each and every individual trader thinks differently. What works perfectly for me may not for you at all. So when you read about any system take out time to re-work it out to your personal style.
Make out your own Entry, Exit, Stoploss, and Take Profit levels to suit your own person.
A WINNING PSYCHOLOGY
Without taking much space let me just give you a list of what I consider components of a winning psychology
1. believe you will succeed as a trader
2. avoid over trading
3. don’t be greedy
4. protect your profits
PROPER RISK MANAGEMENT
This is so important that I will have to dedicate a different post to talk about it
Have a great day.
PRINCE ADEWALE
prindumy@yahoo.com