eToro – Forex Trading Forum

[Tropezienne]

You lack trading discipline – in fact, you don’t even know what the phrase ‘trading discipline’ means

You think – ‘Oh, I’ve got 20 minutes spare – I’ll trade’

Whenever you open your trading platform you intend to find a trade. This is a huge mistake – on opening your platform get it into your head that you are looking for good trading conditions that may throw up a trading opportunity. If you don’t see a certain trade within a certain amount of time – 30 minutes, an hour, no more – close your platform and leave it alone until tomorrow. You do not HAVE to trade but you MUST preserve your trading capital.

You rush into a trade without really thinking about it

You are tired, you trade anyway, you lose, you feel bad, you carry on, you lose – you are revenge trading

You have bad days (after a bad night’s sleep, you missed the bus, your soccer team loses) but you trade anyway

You sit in front of your trading platform, you are feeling bored. You trade anyway

You have carefully formulated your trading rules and method – but fail to stick to them

You have an argument with somebody – then you decide to trade anyway – another form of revenge trading

You have a new trading idea – you fail to test it on your practice account and use it on your real account – ouch !

You take trading advice from a friend – without a thought of the difference between your personalities and situations – you’ll lose. Be true to yourself

You watch a film on your computer whilst trading ……………

[Tropezienne]

Risk Management – Protect yourself against the MARKET

Once you have learned to protect yourself against youself you need to be able to protect yourself against the market.

At this stage you are no longer a complete newbie but you are still trading on your practice account. You are developing or have developed your trading method and are clear about your trading rules and discipline. You know how to protect your trading against YOURSELF. In short, you are in a good state of mind to approach the market with your real money.

So - ‘what can go wrong?’
The simple answer is –‘The market can go wrong’.

Your chosen method and rules are dependent upon certain market conditions – a certain degree of volatility, a news release, a decisive/indecisive market. If the defining condition of your method is not met – your method will not work.
However, conditions are not always so clear and there is one key defensive mechanism that you can use to protect your money: HAVE A STOP

A STOP LOSS ORDER ensures that if you are losing you don´t lose too much. Not to use one is INSANITY. You can place the stop when you open the trade – and you can change the stop during the trade. You should have practiced using Stop Loss Orders on your practice account – if you haven’t then you are not ready to trade with your real money.

continues :

[Tropezienne]

A Stop Loss Order influences how much money you should place on a trade – again, you will be familiar with this from your practice account.

Generally, you should not place more than 5% of your trading capital on a trade. If you have $1000 in your account and you want to place a Stop of 50 pips do the math: - 5% of $1000 is $50 – that is the amount to risk. If you enter a losing trade your position will automatically close at -50 pips. You can, of course, close the trade earlier. Or set your Stop Loss lower – say at 20 pips.

I would advise newbies to trading with real money to trade 2% or 2.5% of your total trading capital. When you switch to trading with real money your emotions are much more intense than when trading on a practice account – note this and give yourself time to get used to trading with real money.

Emotionally, with real money, you will be less realistic – you will ‘hope’ that a losing trade might reverse – it probably won’t – your 2% Stop will be most welcome in those situations. Don’t hope – simply follow your method and your rules. If your method works and if you stick to your rules - you will earn more money. If it doesn´t work, your risk management will protect you, because you will be trading with smaller quantities of money.

[Stayler]

Hello,
I wanted to know if the Stop Loss and Take Profit orders placed together are OCO in this platform.
Thanks

[felix555]

excellent trading lessons, they have indeed stopped me from making hasty decisions, as a novice, how can one be confident with the practice trading account.
When can we start trading with the real account?
Thanks