The risk can be default, earnings do not

The risk can be default, earnings do not

If there is an inviolable when it comes to trade the markets rule is always respect the stops. Before opening a new position we must know our level of accepted risk. This is the best way to ensure that our losses will be under control and we will not let us dominate by emotions when it comes to operate.

The truth is that trading is hard, and the proof of this is that the number of traders who fails is much greater that succeeds. However, traders who fail to do contrary to what many may think because their ideas about the market are wrong, but because they let their emotions become involved in the process. This failure is due to the fact that they close their positions very soon--even the winners - and let run their losses too. The key here is that the risk must be default. Logically the most appropriate time to consider the risk is before entering the market, when our mind is open and the decisions are not affected by what happens to the price.

On the other hand, if we have an open position we want to stay with it until it becomes a winner, which unfortunately happens always. We must always think of the worst possible scenario and place our stop-loss in a monetary or technical level that is consistent with our strategy of monetary management.

Once again we must emphasize the fact that the risk must be default before entering the market, and we must stick to the parameters that we have set for this purpose. Emotions should be abandoned to not allow that they dictate the point in which we place our stops.

Each operation, no matter how safe is your development is basically an educated guess. In the market, nothing is certain because there are many external factors that can affect the movement of prices in the markets, and the Forex does not escape this phenomenon. Sometimes the basics move the market without prior notice and cause changes in trend, in other factors intervene, how the actions of the major central banks or a change in the rates of interest for example. Faced with this reality, the traders must be prepared before the unexpected, for which there is no better tool than the stop orders that limit losses since they allow us to predetermine our risk.

Unlike the risk, earnings may not have anticipated. For example when moving currency pairs, the movement can be broad or the opposite short. It is here that the monetary management becomes essential. Some professional traders tend to operate based on the opening of several batches at a time instead of just one large. In this way ensures fast with the first batch gain while leaving the second run and move stop loss to the point of breakeven (price at which that lot does not produce profits or losses). This allows trader to operate with more peace of mind since it ensures a profit and saves you from the uncertainty of deciding if you should close or not a position that let it continue could provide higher returns.

Usually the Forexmarket moves in trends which can last days, weeks or even months. For this reason many strategies to operate in this market are based on trends since operate on ranges can be difficult and cause constant losses. Despite this, many traders specialize in operate on ranges since they also present opportunities.

If the market is in a range that lot that left open the trader probably finish without causing profits or losses since the price likely will activate stop loss. However, if a trend emerges that same lot will produce a profit.

When operating in the market, half of our trading plan must be constituted by the operation strategy and the other half by the monetary management. Even if we are losing operations, we need to understand them to learn from mistakes. No and well understood no strategy is safe and works 100% of the time. However if the ruling is in line with a strategy that has produced more successes than failures in the past, accept the loss and continue left single trader.

The key is to get our minds to focus on the general approach of our strategy and see each individual operation as something insignificant. Once we have mastered this skill, no matter if we operate with $1000 or $100000, always follow our rules.