Millionaire Tradersmake a trade and it becomes a loser, but tomorrow is another day.
So, when I make a bad trade, I forget about it, go to sleep, wake
up and start all over again tomorrow. Success is also very fulfilling,
which is the main thing that pulls me back into the market. In other
jobs or industries, the feelings of success and failure may not be as
strong. When it comes to trading, every day, you get to experience
the feeling of either success or failure. For people who like the
feeling of success and drive, trading presents plenty of opportunity
for fulfillment.
Q: However, there are many people who face big failures that
make it difficult for them to have the confidence to trade again.
How do you prevent this from happening?
A: Personally, after many mistakes, I have learned that the most
important part of trading is using stops because, at bare minimum,
it allows you to control your risk since bad trades are unavoidable.
Let’s take a casino, for example. There is little chance that you will
be able to win 10 out of 10 bets. As long as you control your betting
size, however, it will allow you to retain some of your capital to
play the game the next time around.
Another thing that I don’t like to do is to average down and post
margin calls. There are many people who will go long a currency
pair and keep injecting money into their accounts if they get margin
calls and buy at even lower prices in hopes that a rally will help
them to recover their entire account. For example, if you are long
10 lots, if the price falls, you add 20, if it falls again, you add 30
etc. Although the ability to recover quickly may seem extremely
attractive, it is very dangerous and it is something I will rarely use.
I feel that if I keep on posting money into my account to meet
a margin call and add into a losing position, I am essentially at
the whim of the market. I can only hope that the trade moves in
my desired direction. But I am stripped of my decision making
power. Perhaps the price movement would have called for a short,
but since I am buried so deep in the long position, I can only let
the market take me where it wants to. So what would I do if I
got a margin call? I would close my position and wait for the next