Saturday, 24 December 2011

Money management & Psychological management

As a newbie, when I read various tutorial, one thing comes regularly and repeatedly. That is, money management. Without proper money management plan, no one can be a successful forex trader. It's true. Initially when I tried to place order without any planning, I've earned few trade, one very big but lost so many small trade which ultimately took me to a net loss account. But when I started demo trading with specific trading strategies, my loss started to become a tolerable one. Trades with such strategies, I also started to build my confidence in forex trading which was a very negative one earlier. I started to lose hope and give away forex trading. But suddenly I've found a very good resource. With the proper use of it, I started to regain my lost confidence.

Another thing besides money management I've learned another thing. It has been discussed in the tutorials though.... I want to name it in a different way. That is, psychological management. Without this also, one cannot be a successful trader. During my demo trading with some popular strategies, I've found that, sometimes it becomes impossible to control my emotion regarding execution of a order in the trade.

During some trading I've found that, sometimes, indicators in a strategy, yet to give a signal but in a raw look, it seems that an entry is inevitable and profitable. Irresistible desire to get profit compels to enter a position when the indicators of the strategy in hand doesn't give any signal yet. Most of the times, it's found that, no signal generated where we already entered into the trade.

I know, sometimes, our intuitions are correct and not following our emotion leads to loss of some pips but in the long run, strictly following a strategy pays off. Developing this skill of psychological management is the most tough part, I think. Thus, money management & psychological management are the integral part of preparation for forex trading. I'm passing through this tough stage now. I believe, I'll need more time to learn these.

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