Never Trade Hungry!

September 29, 2009 by FXChris & Wife

Today's brief article may come off as a bit direct towards many of you, I am sorry about that but this directness is necessary to get the point across.

I would like to start by reciting a mantra that every FOREX Trader should repeat each night …

“IF YOU HEAR YOURSELF SAY . . . I CAN’T AFFORD NOT TO TRADE . . . THEN YOU CAN’T AFFORD TO TRADE!”

Let’s start with the most basic of concepts to protect you from finding yourself in this situation, don’t trade with money you can’t afford to lose. Seems simple enough, yet there are those of you out there who have deposited, our are considering depositing, your rent money into your FOREX account with the delusion that not only will you not lose it, but you will also increase the size of said account, so you can buy your groceries too. To put it gently, you are wrong! How can I make such an assertion with confidence? One word … FEAR! You can be the most confident, comfortable Trader alive, and if you put your last bit of savings into your trading account everything you know will fly out the window that fear just opened. When you are afraid to lose any part of your capital you will never again have the confidence to believe in your analysis or the trends that are in front of you. You will immediately become trigger shy, the enter button on your platform might as well have a skull and cross bones on it because you are not going to hit it. If you do muster up the courage to hit the button, it will definitely be late, you are absolutely going to be out of position, frantically chasing the pair, or heaven forbid reloading a loser trying to recover. Imagine, in your head, you are now listening to the Beach Boys echoing over and over WIPEOUT, because that is what has just happened to your account.

Let me repeat, do not trade with money you can not afford to lose! They say love is blind, but love has nothing on fear. If you are trading with money you are afraid to lose you might as well sit down with a blindfold on because you are not going to see the market clearly. You may not be seeing the market clearly, but what you will have a crystal clear view of are the friends that fear brings along to the party; for example, never far from fears side are apprehension, aggression, bitterness, anger, doubt and last but certainly not least there is self loathing bringing up the rear. It is simply not possible to be a productive, profitable trader if you are being ruled by any one of these emotions, yet that is where you will find yourself if you are trying to trade with money you can’t afford to lose.

Additionally, it is very important to remember that when you decide to invest in FOREX you not only have to be able to invest financially, but you must also be ready to invest your time, energy, and dedication. Again, don’t trade with money you can’t afford to lose, don’t trade if you don’t have the time it will take to learn and grow, and don’t trade if you lack the energy or dedication to give 100% of yourself to the cause.

I offer this message to you with the hope that it may give you a jolt, a reminder or a wake up call. Over the years I have been witness to this very situation with many traders. We all make choices in life which we believe to the best for the situation, and it is only with hindsight that we realize that some of the choices turned out to be tragic mistakes. While I firmly believe all mistakes are learning opportunities in disguise, I also believe that there is no need to recreate the wheel. If there is someone before you who has gone down a road and made the choices that you are considering, learn from their experience. Is there a chance that it will all work out for you in the end? Well, sure there is; however, the odds are not in your favor. Keep in mind that the statistics say that 95% of all traders will wipe out. I am hoping that this message will in some way help you to become a part of that 5% that do succeed.

Happy Trading!