Most of the novice traders think that the major responsibility of a trader is to make money.
But do you know who is responsible for making money?
It’s the market!
If you buy a stock at $50 and then it goes to $55, the market made you money.
You didn’t do anything for the stock price to rise, you just waited for it to move, nothing more.
If instead, the price goes from $50 to $49, you close your position.
And then the price keeps falling until $40.
You did your job, you protected your money.
That’s the way to trade stocks.
That’s the way to trade forex successfully.
In fact, more important than to make money is to preserve your capital.
The no.1 responsibility of a trader is not to lose money, is to protect the money.
You can use a trading pattern to cut your losses
You should never lose more than the reason for your entry.
The reason for your entry is just a pattern that you identify on the trading chart.
The break of that pattern is your time to enter.
If the price goes against you, then just stop it before it’s too late.
Stop it before your small loss turns into a big loss and then into a huge loss.
How many times you already made this mistake, over and over?
Just put your Stop Loss on the other side of the reason for your entry – the trading pattern!
Because if your reason disappears, gets deleted by the price, there’s no point in continuing with your position open.
And when you add to your position, when your 1st trade is in profit, then just adjust your Stop Loss.
Your risk cannot increase!
You must always cap your maximum risk per trade and be faithful to whatever is that value.
If you just lost the reason for your entry why would you keep your position open?
It’s dumb to lose more than that.
But in fact, most novice traders don’t understand this.
They are moved by emotions.
They don’t want to lose.
They don’t understand that small losses are part of the profitability process.
If you don’t accept your losses then sooner or later your account will just disappear.
If you never lose more than your reason for entry then you have the path clear to be a profitable trader.
