April 24, 2024


Business – Your Game

Do Not Trade Forex With Money You Cannot Afford To Lose

Do not invest any money you cannot afford to lose.

You would have been seeing this disclaimer on every forex brokers’ website you visit. This I believe is to save them from law suit if you lose your hard earned money. You have been warned. You are responsible for the risk you take. This should have warned a lot of us from even trading at all.

But Forex trading sometimes is addictive; even if you are losing you still believe things would be better one day. You will make all the money you have lost and still make some profit to make it worth while for you. It is like cigarette smokers that see the warning in every advertisement telling them they are liable to die young. Still we still see millions of them smoking. Forex is better than this because you are not going to die young by losing money.

If you are trading with capital you can afford to lose, then you will be able to take any risk in trading. You will be able to take large risk and in Forex trading large rewards cannot be achieved without large risk.

A student of mine trained somebody that invested $2000 in his trading. He had been warned that he should not invest the money he could not afford to lose. With this in mind, he was trading without fear. In two weeks later he turned it to $6000. He was trading without fear. Fear of losing is a great enemy of making money in Forex. Fear will let you cut your profit short. The maxim “let your profit run and cut your losses” will not be implemented when you are fearful.

It is like what Jesus told his disciples in the Bible, he said those who are afraid to lose their life would eventually lose it and those who are not afraid to lose their life will eventually gain it. This is the reason when you are trading with the money you can afford to lose, you trade without fear and you make money.

You will trade with your full lot instead of trading with 10% of your lot.

When I started trading, I started with $100. I turned it into $300 after two weeks. I was trading without fear since it was just a little money I could afford to lose.

My friend also took $97 and turned it into $470 in two weeks, yet he was losing in another account of $5000. I told him he was afraid of losing that and that was why he was losing.

He believed what I told him and he overcame the fear of losing and was making money.

When you know you can afford to lose the money you are trading with, you will take a high risk that will give you high result. Every successful man in this world is a risk taker. If you cannot take risk you cannot make it.

It reminds me of a story I read long time ago. An Army General took his troop to war, by the time they reached the enemies’ territory; he had lost some of his soldiers. They entered the land the through sea. The enemies were three folds more than them. Seeing this, the general went back to their ship and burned it to ashes. The soldiers were amazed that their source of escape had been destroyed. He told them that they had to win or die. They had no option than to fight and win. The moral of this story was they were not afraid to fight since their only option of escape was gone. So they fought like men that were not afraid to die and eventually they won. With the money you can afford to lose you will trade without fear.

I am not saying you should trade blindly, but trade with good plans and trade with the maximum of your lot. This is what will help you to make it in forex. Some people use tiny percentage of their equity to trade and they end up making tiny profit every month. To even make 10% of their equity as profit at the end of the month will be difficult whereas some that take risks with their full lot make more than 400% of their equity every month.

Go to any Forex Forum site and mention you can make just 50% of your equity every month and you will see how they will respond to your posting. They will tell you Forex is not a get rich quick business. They will call you all manner of names. You must never blame them because they are either trading with sacred money or they are afraid to lose their money. Make up your mind that you are trading to make it. You will make it if you are not afraid to lose your money.

My goal for every trade is to make just 10pips. My stop losses are always 40 pips. I am not afraid to lose 40 pips of my equity and you know what, it was just once in the past month that my stop loss was hit. I have 13 good trades with 130 pips and when my stop loss of 40 pips was hit, I still make another 10 pips that day. So in a whole month I made 100 pips when you subtract my lost pips from my gains. So at the end of the month I made 100% of my equity.