After I finished my first course that taught me how to trade the Forex market, I was certainly excited. So much so, that I wanted to trade as quickly as I could and within 2 weeks of finishing the course and successfully trading a demo account, I started to trade my live account. Not only was it a live account, but it was all the money that I had set aside for trading in the Forex market.
Well I’m guessing you know what happened next… the balance of the account quickly lost value. Despite my enthusiasm and success with my demo account, I found that my previous successes now eluded me. There were many mistakes that I made during this time, but the one I want to point out was the type and size of my account. You see because I was in a rush, I wanted to grow my account as quickly as possible. The problem was that I was not yet experienced enough to put all of my funds at risk. Now I did practice risk management and rarely put more than 3% of my account at risk at any time. This did allow me to conserve my funds and not lose them too quickly, however when you lose over half your account, it takes quite a while to build back up.
A much better approach would've been that upon going live, I should've only put in 10% of my trading funds into one account and hold the other 90% in reserve until I had proven to myself by increasing my account value that I had what it takes to be a successful trader. That way, even if the account went to zero, the emotional impact would have been less, and I still would've had 90% of my funds in reserve to continue trading.
I already had much of the emotional intelligence concerning money to trade the Forex successfully, however I didn’t have the understanding and experience of the market that is required to be profitable over the long term.
If I had it all to do over, I would have traded a micro account until I had at least doubled the funds in that account at which point I could have moved up to a mini account and pulled money out of my reserved funds. This would have allowed me to build up slowly and start understanding the nuances of the market while limiting my losses even further until I was a more seasoned trader.
Well I’m guessing you know what happened next… the balance of the account quickly lost value. Despite my enthusiasm and success with my demo account, I found that my previous successes now eluded me. There were many mistakes that I made during this time, but the one I want to point out was the type and size of my account. You see because I was in a rush, I wanted to grow my account as quickly as possible. The problem was that I was not yet experienced enough to put all of my funds at risk. Now I did practice risk management and rarely put more than 3% of my account at risk at any time. This did allow me to conserve my funds and not lose them too quickly, however when you lose over half your account, it takes quite a while to build back up.
A much better approach would've been that upon going live, I should've only put in 10% of my trading funds into one account and hold the other 90% in reserve until I had proven to myself by increasing my account value that I had what it takes to be a successful trader. That way, even if the account went to zero, the emotional impact would have been less, and I still would've had 90% of my funds in reserve to continue trading.
I already had much of the emotional intelligence concerning money to trade the Forex successfully, however I didn’t have the understanding and experience of the market that is required to be profitable over the long term.
If I had it all to do over, I would have traded a micro account until I had at least doubled the funds in that account at which point I could have moved up to a mini account and pulled money out of my reserved funds. This would have allowed me to build up slowly and start understanding the nuances of the market while limiting my losses even further until I was a more seasoned trader.
