Manage Your Risk

Manage Your Risk- For F**K Sake!

Well for many traders today was the morning after the night before, and not for good reasons! Anyone who was looking at the markets after NY close would have seen the capitulation of the USD/JPY as well as the other YEN crosses.

What ever was the cause, be it manipulation or automated trading, there was a fair bit of losses experienced by some traders.
I was on forex factory and there were a good few posts where people were losing a lot of money. Some had margin calls, which basically means the broker closed their positions because funds had become so low.

I was also seeing on other forums and blogs in the past day or so, people buying the USD/JPY as it approached the all time low at 79.72, some even went as far to say “it wont break support” in order to make comments like this one would need to know the future, and I’m afraid nobody does. They believed so strongly in their trade that the odd one did not even use stop losses. When the support broke they should have been out of the trade faster than they could blink. Sadly I know of one or two who lost a lot of money.

NO one trade should EVER have the possibility of causing serious damage to your account. It is your most important possession(as a trader) and to leave it vulnerable to limitless drawdown is the road to disaster, and to be honest crazy.
This is one of the reasons forex gets a bad name, people go in, don’t control risk, and then go round and say it’s a scam or whatever.

I’m half expecting anger directed towards me for this post, but I don’t care. People need to control their risk. If you don’t use a stop and exit manually at a certain point, then you still need a stop as an emergency, this will protect you from disasters.
If you are not using stops or controlling your risk in some way, you are not trading, you are gambling, simply trading and then waiting for the market to go in your favour will work time and time again, so long as you can sit through some pain, but eventually price will move against you and it will never come back! If you are leveraged, you could be wiped out in a short space of time.
I’m not writing here to try and act smart, I’m trying get you to change your ways, I’m pleading with you! To start using a proper risk management model. A losing trade should not cause you any problems.

Only other thing to say is that I will be starting a trading challenge which will revolve around daily price action setups. I am going to demonstrate in real time trades on daily charts. As well as cover the money management aspects of trading.

Stay safe,
John

Reply