Don’t invest money you can’t afford to lose.
You would have been seeing this disclaimer on every forex broker website you visit. I believe this is to save you from a lawsuit if you lose your hard earned money. You have been warned. You are responsible for the risk you take. This should have warned many of us to even trade.
But forex trading is sometimes addictive; even if you are losing, you still believe that things will get better one day. You’ll win all the money you’ve lost and still make some profit to make it worthwhile for you. It’s like cigarette smokers who see the warning in every advertisement that tells them they can die young. We still see millions of them smoking. Forex is better than this because you are not going to die young losing money.
If you are trading with capital that you can afford to lose, then you will be able to take any risk in trading. You will be able to take great risk and in Forex trading you cannot achieve great rewards without great risk.
A student of mine trained someone who invested $2000 in his trade. He had been warned that he should not invest money that he could not afford to lose. With this in mind, he was operating fearlessly. In two weeks later he changed it to $6000. He traded fearlessly. The fear of losing is a great enemy of making money on Forex. Fear will allow you to shorten your profits. The maxim “let your profits run and cut your losses” will not apply when you are afraid.
It’s like what Jesus told his disciples in the Bible, he said that those who are afraid of losing their life will eventually lose it and those who are not afraid of losing their life will eventually gain it. This is why when you trade with money you can afford to lose, you trade fearlessly and make money.
You will trade your entire lot instead of 10% of your lot.
When I started trading, I started with $100. I turned it into $300 after two weeks. I was trading fearlessly as it was just a little bit of money that I could afford to lose.
My friend also took $97 and turned it into $470 in two weeks, but he was losing another $5,000 account. I told him that he was afraid of losing that and that’s why he was losing.
He believed what I told him and overcame the fear of losing and was making money.
When you know you can afford to lose the money you are trading, you will be taking a high risk that will give you a high return. Every successful man in this world is a risk taker. If you can’t risk it, you can’t do it.
It reminds me of a story I read a long time ago. An Army General led his troops to war when they reached enemy territory; he had lost some of his soldiers. They entered the land by sea. The enemies were three times more than them. Seeing this, the general returned to his ship and burned him to the ground. The soldiers were amazed that their source of escape had been destroyed. He told them that they had to win or die. They had no choice but to fight and win. The moral of this story was that they were not afraid to fight as their only option of escape was gone. So they fought like men who were not afraid to die and finally won. With money you can afford to lose, you’ll trade fearlessly.
I’m not saying you should trade blindly, but rather trade with good plans and trade with the maximum of your lot. This is what will help you succeed in forex. Some people use a small percentage of their capital to trade and end up making small profits each month. It will be difficult to get even 10% of your capital as a profit at the end of the month, while some who take risks with their entire lot make more than 400% of their capital each month.
Go to any Forex Forum site and mention that you can earn only 50% of your capital each month and you will see how they will respond to your post. They will tell you that Forex is not a get-rich-quick business. They will call you all sorts of names. You should never blame them because they are trading sacred money or they are afraid of losing their money. Decide that you are negotiating to achieve it. You will succeed if you are not afraid of losing your money.
My goal for each trade is to make only 10 pips. My stop loss is always 40 pips. I am not afraid of losing 40 pips of my capital and you know what, only once in the last month my stop loss was reached. I have 13 good trades at 130 pips and when my 40 pip stop loss was hit I still made another 10 pips that day. So in a full month I made 100 pips when you subtract my lost pips from my profit. So, at the end of the month, I earned 100% of my capital.