Welcome back to Part 3. If you have been following this series, I hope that you have learnt the benefit so far with the first 10 rules of trading discipline. The next 5 rules emphasizes more on losing trades. How you should learn to accept it and ways to avoid it.
The first loss is the best loss.
Once you think that your trade is no good, it’s best to exit immediately as what Rule #10 has stated. Another tell-tale sign is when you have these phrases “It’s never a loser until you get out” and “Not to worry, it’ll come back” start to appear at your head then it is an affirmation that the trade is really no good, it will not come back and it is time to exit. If this is your first loss, it is the best loss. Always remember!
Don’t hope and pray. If you do, you will lose.
Anyone with a open losing trades will resolve to this resolution. I have done this many times when I was new. I would pray for some sort of divine intervention. In the end, it never materialized. So, it is a waste of time and money. Just follow the rules and get out!
Don’t worry about news. It’s history.
Before I go on, I have another articles on “Why is Forex news important?” which is different from this rule. You can read about it.
Here we are referring to those news that are reported on TV channels like CNBC, Bloomberg News, and so on. What can you expect from these news reporters? They are not experts. They know very little about market dynamics and market price action.
The fact is that the reporting that you heard on these business channels are already ”old news”. The story has already been dissected and consumed by the professional market participants long before the news has been disseminated. So, do not trade with these news. It is too late.
Don’t speculate. If you do, you will lose.
What is speculation in Forex? It means that you are trying to predict one currency will rise against another currency. If your guess is wrong, you will lose and the chance of guessing correctly is always very slim, more like depending on lady luck. So, avoid speculating and be a trader.
Short-term scalping of the markets is the answer. The probability of a winning day or week is greatly increased if you trade short term: small winners and even smaller losses.
Love to lose money
You might be asking ”What do you mean, love to lose money. Are you crazy?” When I read this rule for the first time, I also have the same thought. Read on and you will understand why.
What this rule means is to accept the fact that you are going to have losing trades throughout the trading session. Get out of your losers quickly. Love to get out of your losers quickly. It will save you a lot of trading capital and will make you a much better trader.
I have finished with the 5 rules today. What you need to learn is to accept losses and cutting losses according to your trading plan is part of the game. Stay tune and look out for the next 5 rules in Part 4.
Any questions? Leave your comment below!