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Pigs Make Money, Hogs Get Slaughtered - Part 6
To become a profitable trader you must approach the Forex Market with a detached, unemotional, and rational mind-set. Getting to this mindset is easier said then done. If you are a novice trader, you will become emotional when you trade. Heck, even the most experienced traders become emotional when they trade...it is common place. With discipline, patience, awareness, and practice, you can trade with a winning mindset. In our morning Trading Room, we always discuss the following subjects. If you can stay in balance with this list then you can become profitable; Emotional Management Money Management Patience and Discipline Notice that none of these subjects mentions trading. If you are serious about making money through trading, then you must have the discipline. Discipline to follow your money management system and discipline to follow your trading system. But the biggest factor is discipline to leave emotions at the door. If you fail to plan, you are planning to fail. Let’s get things into gear by discussing Money Management. You will hear different phrases for the words Money Management, for an example, Risk Management. Management of your account will make or break you as a trader. Your number one goal in trading is to preserve your trading capital. One of construction workers main tools is the hammer – without a hammer on the job they are incomplete. Your main tool is your trading account and without it you are finished. Don’t focus on making money; focus on protecting what you have. Nothing is more important!!! So what can we do to manage this precious commodity? First, you must use a system each time that you trade to calculate how many Lots you are able to trade during that session. We at Forex Confidential have used the same money management for years because, well, simply put, it works. You need to find a money management system that works for you and then have the discipline to ALWAYS USE IT. Another way to preserve our capital is to use stop losses and targets as we trade. Stop losses will cut our losses and profit targets will help us lock in profits. Also, if you are in a trade, and that trade losses it’s “loving feeling”, that “warm fuzzy feeling” of being a successful trade, then get out of it. There is no sense staying in a trade for a loss of 75 or 100 Pips when you have the opportunity to close the trade out sooner. Cut those losses off as early as possible. Remember this – You are not married to any trade. Yes, losses come with the trading territory and the sooner you accept this the better trader you will become. But again, cut those losses off early. "Most successful market professionals achieve success by controlling risk. Controlling risk goes against our natural tendencies. Risk control requires tremendous internal control." Dr. Van Tharp Money Management is one of most important building blocks of becoming a successful trader. Remember – If you lose your cash, you can not trade. Be disciplined with your money. Use a successful Money Management system and soon your baby steps of Forex will turn into big steps forward. Part 7 to follow Finest Regards, Steve DeWitt [url]www.forexconfidential.com[/url]
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