The old battlefields of the middle ages are not gone, they have
merely changed form. Hundreds of years ago normal men would set out to
build their empires by conquering lands through the force of arms.
Today, normal men like you and i set out to build our financial empires
by conquering markets throught the force of self. The blood soaked
battlefields of yesterday have made way for the cash soaked commercial
battlefields of today, with the large private armies of Family warlords
making way for large pools of family capital. Just as armies were
needed to shape empires of the past, so too is capital needed today in
order to put modern commercial plans of conquest into action.
In there, lies the reason as to why many forex traders fail. They go into battle risking too many soldiers (capital) and without the knowledge of tactics needed to win the fight.
Lets look at that again.
- They risk too much capital
- They do not understand Forex markets
No general will risk a majority of his men in a battle that he has no plan for and where he has no idea about his enemy. So my question to you is, why would you risk your capital in market conditions you know nothing about? Luckily two remedies exist for the forex general who finds himself in this situation.
- Make it a rule to only risk 1% of your capital in any one trade. This is to minimise your losses
- Educate yourself so you can recognise your chance to strike but also recognise when it is neccessary to withdraw. Learn to read the conditions of the forex battlefield. Great generals of the past would spend years learning battlefield tactics, luckily we can achieve this in a couple of months
