Know Your Limits

Posted by on Jun 10, 2014 in Featured, Learning to Trade?

Know Your Limits

Most people work better when they have a set goal in their mind, I know that I most certainly do. This goal does not have to be set in stone but something to work towards and aspire to that can be reconsidered as you approach it.

When it comes to trading I believe that one of the hardest things to do is to keep your emotions in check. At the end of the day we have to rely on money to keep our heads above the water and so when losing or winning sums of money it is hard to not become attached or emotionally involved. The best advice ever given to me when I was a young, budding trader was ‘know your limits’. Each person should consider how much he or she is okay to part with when entering a market such as this.

Everyone has a different financial situation and so there will be completely varied numbers of how much each individual is okay to put at risk. When really analysing yourself and your personal situation you may be okay with risking £3 a day or £5 a day maybe £50 or £100.

Another great piece of advice I was given: do not chase your money in the foreign exchange market. If one day you make a loss on your currency pairs do not invest more to try and compensate for the loss. Accept it! Keep your emotions at bay and stick to your trading plan.

The last piece of advice I will disclose in this article is do not be greedy. Did you know how many pips you wanted to make today? Have you reached your daily or weekly target? Of course the choice is yours but it happens oh so many times where traders can see that the charts are fluctuating and have convinced themselves that it will continue like this, changing intermittently, for some time before creeping up again. It’s pretty much a 50/50 gamble and they are odds that I wouldn’t like to take because if it declines who knows how much you may lose when you could have walked away with a nice little profit. Obviously if it does continue to rise you may be irritated that you did not fully take advantage of that but is it worth the risk? Know your limits and what you are willing to gamble to get your ideal results.

Do you know your limits when it comes to trading? If you would like some help keeping your emotions in check and setting a goal please get in touch to see how we can assist you.