Big Forex mistakes will reduce your account balance until you go down to zero. When I say big mistake My definition is this: large losses over 5% of your account balance at one time. These could include margin calls which could be greater then a 50% loss at one time. Now that is what I call a big mistake!
With Forex trading, consistency is so important to achieve long term success. Doing the right thing day in and day out without making the big mistakes that will destroy your chances at success. Let me give you a real life example of something similar you can apply this to.
When I was in high school I played tennis for the school tennis team. I was an average player without any great skills. However I noticed that when I tried to make a killer power shot I would hit the ball over the fence or into the net. Making a big mistake every time would eliminate my chances for success. The key was it was not the opponents skill that would cause me to lose, it was my mistakes. When I realized this I changed my game to begin to work on eliminating those mistakes. Instead of killing my opponent my goal became to eliminate my own mistakes. As a result I kept the ball in play more often which gave the opponent more chances to make a mistake. So when I began to focus on keeping the ball in play rather then the big kill I did much better and experienced more success.
So the purpose of that story is to advise you traders to stop going for the big kill. Keep your trades small, and consistant and over time you will achieve long term success. By making big mistakes you take yourself out of the game. When I say big mistake I mean large losses over 5% of your account balance at one time.
If you have any tips on how to avoid these mistakes please post them in the comments below.
Winner’s Edge Trading, as seen on: