FOREX DIARY

If you are new to trading or still figuring out how to make money in Forex, the balance in your account is crucial. Keep this in mind. Trading skills, strategies, and mindset mean little if you don’t have funds to trade with. In the beginning, it’s essential to learn how to read the market to earn money, but you must also focus on keeping your account funded. You need to survive in the market before you can think about making profits.

Many newcomers quickly deplete their accounts due to the illusion of making fast money in Forex. They keep losing money over time while trying to gain experience, and by the time they learn, they have very little left. This article aims to help you understand the importance of protecting your account balance and offers some suggestions on how to do so, ensuring you stay in the game long enough to ultimately become a successful trader.

Do you and your account have enough experience? If you spend time carefully observing and assessing the market, you will begin to see that everything you observe has some meaning. You may even understand the mindset of others engaged in what I refer to as "battles" on the charts. At this point, you start to view the market like a professional trader. However, as mentioned earlier, all of this is pointless if you lack money.

Consider a person who decides to go skydiving. They simply board the plane and jump out when the door opens, just because they enjoy it. Relating this to forex trading, if you enter the market without proper knowledge, without warnings about potential mistakes, and without someone clearly explaining the reality of the situation, you are just like that skydiver. Both of you are heading toward a dangerous outcome: failure. Every day, I witness too many individuals facing that failure in the market.

Many traders in the market overlook a key fact: to be a successful trader who earns money over the long term, having capital to trade with is essential. Instead, they often engage in reckless trading, placing numerous orders every day without proper consideration. Think of your trading account as a ticket to enter the market. Without that ticket, you cannot participate. It is crucial to be cautious when deciding to risk the funds in your account on any trade. Running out of money means the end of your Forex trading journey.

What should you take a risk on? This isn’t about the amount of money you risk or the percentage of your account for each trade. When you first start learning and trying out forex trading with real money, it’s crucial that your account can handle at least 50 trades. The primary goal is survival. Focus on staying in the game before you worry about making profits. As a beginner, the longer you last, the more you will learn.

Evaluate your available funds, your income, how much you are willing to lose, and your monthly expenses. Decide the amount you can safely risk. Understand from the outset that losses are likely because you lack knowledge, trading skills, market understanding, and self-control. There are countless things you do not know yet.

Disregarding these unknowns may result in significant losses. While you might see these losses as tuition fees, it's possible to manage how much you pay for that education. Investing in forex requires a clear strategy and discipline. Stick to a plan regarding your trading account, such as how much you can afford to lose in a month or a year. Most importantly, avoid borrowing money to trade forex or trading with more than you can handle.

Do not run out of resources; plan for a long battle. Forex trading is much like a real battle every day, with many people entering the market and just as many exiting. Some find success, while others may never return. This battle can span decades, and the market will still be there tomorrow. Therefore, it is essential to prepare for the long term and aim to earn money steadily. A month or a year of success doesn't guarantee future results. In just one week, you could lose everything if you aren’t careful.

Without resources, you cannot fight. If your account is empty, trading is impossible. Limited funds mean you cannot take significant risks on important opportunities that have a high chance of success. Wasting resources on uncertain chances or placing many trades in a day can lead to losses.

Start by making small trades. For beginners or those who lack confidence in their trading skills, it is important to keep your daily trades manageable. Regardless of how comfortable you feel with your stop-loss amount, consider reducing it by half. If you were to lose ten trades in a row, would your account still be intact? Would you have enough cash on hand to keep going? You can set both safe and risky stop-loss points while keeping the overall risk the same by adjusting the trade size. For instance, a 2-lot trade with a riskier stop-loss at point A results in the same loss as a 1-lot trade with a safer stop-loss set at 2A. Visualize a pin bar; the riskier stop-loss would be halfway down the pin bar compared to the safer option above it. Remember to let your winning trades run for as long as possible. It is wise for newcomers to the market to start with very small trades and gradually increase the size as they improve their trading skills.

Trade wisely. Only place bets when you have strong hands. Enter trades when you notice price movements with a high chance of success, particularly those you trust because of past victories. Understand your strengths, hold on to them, and have faith (avoid taking profits too early). Forex trading requires a defensive approach; protect your account closely and observe constantly. Only when you see a clear, valuable opportunity should you risk your position to grab it. Remember Buffett's principle: never lose money. If you lose, you can't continue playing. Do not seek shortcuts, as they do not exist. Avoid falling for the illusions created by those looking to take your money. The truth is that most participants lose money. Always focus on safeguarding your account rather than making numerous uncertain trades each day.

Avoid letting confidence work against you. For instance, when you are on a winning streak, it's crucial to stay calm and be cautious. This can be quite challenging. When you become overly confident, try to bring yourself back to a neutral mindset. This is often when significant losses can occur.

Don’t rush to place huge bets just because you feel sure about a high-probability setup. Every trade carries the chance of winning or losing. Never let confidence drive you to prove yourself right against the market. It's important to pay attention when a winning streak ends with a significant loss and to notice what happens next. If you've been trading for a while, you understand this. For beginners, be warned: a single loss can wipe out an entire account.

Trade only when the risk-to-reward ratio is favorable. To protect your account, ensure you're taking trades that have a good balance between risk and potential profit. Your winning trades should be able to cover the losses from at least two or three losing trades. If your loss on a trade exceeds the gain from a win, it will be tough to profit in the long run or even short term.

A trader with a good risk-to-reward ratio can still make money even after losing six out of ten trades. Consider how far the market can move; who would have predicted that Bitcoin might reach nearly $74,000? If your trade is moving in the right direction and showing a profit, have the courage to let it continue working for you, aiming for a strong profit-to-loss ratio. One successful trade can protect you against multiple losses and secure your account.

In conclusion, when striving for long-term success in forex trading, the most important factor is protecting your account. Many traders waste their resources early on while still learning, leaving little for larger opportunities when they have gained some experience and skill. Some may even lose everything early on, wrongly believing that forex trading is a scam.

When you open a real account to trade forex, you need to be very careful. This is when your emotions are highest, expectations are greatest, and your money is most likely to be lost. If you don't believe it, learn about successful people in this field. They have many similar thoughts, and you should have your own experience as well. Start with small transactions to learn. If you believe, apply what I share. It will save you money and time, and set you on the path to long-term success in forex trading. The important thing is not speed, but going in the right direction.