Not Caring About Your Trading Capital

Filed under: Learn Forex Trading |

Screen shot 2013-07-11 at 10.19.53Today, I would like to discuss a little bit about the more psychological aspects of trading forex, and in particular about how the most successful traders seem to have a very casual view of their trading capital.

 

There seem to be two types of traders in the forex markets. On the one hand, you have people who risk their savings – savings that they have worked hard to build up, and when they start to lose some of it, it is painful because they remember how hard it was to save. Even worse, some people actually risk money that they cannot afford to lose – their rent money, the money they will use to pay their bills, or worse still, money from a loan or credit card. These people get even more stressed about any losing trades; they are gamblers – and they take increasing risks in order to try and win the money back. On the other hand, you have traders who are well funded, who trade with money that they can afford to lose. Perhaps this is money that they never expected to have in the first place, from an inheritance, a bonus at work, some shares that went through the roof, or a lottery win. Wherever the money is from, they don’t really need it for anything else, and they use it to fund their account. So, which type of trader do you think will be the most successful?

 

It is well documented in a number of sources that the world’s best traders seem to have a very casual approach to losing trades. In fact, some of them react in exactly the same way if a trade losers or wins. They simply go through the process of their method, and let their equity curve take care of itself. They never make emotional trading decisions, and if they do, win or lose, they regard this as losing (because they have made a trading mistake). So try to care less about your trading capital (although it is hard – I know!), and only trade with money that you can afford to lose. Your profit/loss figures will be the better for it.

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