Today, i would like to discuss about what i call the newbie syndrome.
Most of us, when we start out, have small TPs in our minds and we all
enter forex after some thorough study and all studies tell us that we
need to have strict SLs. So when we start out trading, we have good
TPs and SLs and we trade diligently.
With this kind of trading, we slowly accumulate our profits and
suddenly we find that we have doubled our account and we feel happy
and proud. But as the size of the account grows and as we make more
and more successful trades, we forget our good habits and slowly fall
into bad ones.
We forget that we need to have SLs, we forget that we need to set good
TPs. So what do we do? We find that some of our SLs get hit and then
the pair travels in the direction of our trade. So, slowly, we stop
using SLs. We keep losing trades and we keep hanging on to them hoping
that somewhere somehow some magic would happen and we would get back
to parity on our trades. We also become greedy and start having
impossible TPs. We forget the strategy that we used to make so much of
profits and start trading with no strategy at all. This slowly leads
to degradation of our account and one fine day, we find that our
account has been wiped out totally.
The best way to make money is to be patient with our profits and
impatient with our losses, but we always do it the other way around.
We are impatient with our profits and we close our successful trades
with very small profits. We are very patient with our losing trades
and we keep waiting and waiting hoping that it would come back but the
trade never comes back and it either closes out our account or someday
we get a flash, understand that the trade would not come back and
finally close the trade with a huge loss.
The above is the newbie syndrome and i guess many of us would have
gone through it. So find out what strategies made you make a profit
and stick to it. Dont change it. Times would change and your trades
would keep going up and down but stick to strategy. Keep studying the
market, its changes and keep analysing and keep developing new and
better strategies in sync with the changing market. Analyse your new
system thoroughly and make sure that it would be a profitable one in
the long run before you decide to leave out your previous trading
system and switch to a new one.
By Karthik Subramanian Follow Karthik on Twitter.
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