As conventional wisdom typically goes, this is heretical. I know. However, I suggest that you implement a series of three simple techniques that can cleverly change your financial life forever!
1) Trade from the longer-term charts, i.e. 1-hour, 4-hour, and daily
2) Trade the small trade size we’ve talked about
3) Ride out your losses and trade your way out of trouble
Furthermore, if you are trading with the trend, and the trade goes against you, that’s a pullback and you will get in at a better price for a second or third entry. You will be able to get out of trouble.
If you are trading against the trend, and the trade goes against you, you will be able to re-enter at a more favorable price for a second or third entry. You will be able to get out of trouble.
When you think longer-term, and you trade small size, and you trade your way out of trouble, you:
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1) Face your problems,
2) Learn to make plans under stress,
3) Learn the limits of your trading system,
4) Avoid a cycle of overtrading,
5) Avoid giving back gains on one big loss.
And so much more… You will also make way more money. Way more. I promise.
This begs the following question:
What system allows a person to ride out their losses?
I trade divergence, counter-trend, on any one of 20+ currency pairs. My trades are open from 1 day to 14 days, and in some extreme cases a few months. My drawdowns reach 10% sometimes (total) and I keep my trade size small. But you could do this same method on a trend trading strategy, or a fundamentals strategy – and it is particularly well suited to long-term trading, especially where you are keeping your trade size super small (think less than a mini lot per $10k in your trading account).