If anything can go wrong -it will. That is the summation of
Murphy’s Law. That phrase has an important significance on our bearing as forex
traders whether pros or amateurs. Applied to the forex market,
it simply means that we can never completely insulate our
open positions from possible losses no matter
how perfect our trading strategy might seem to be. Our relationship with the
forex market is never a match made in heaven and many a times we will suffer
heart breaks.
The forex market
has a fickle organ that mutates on every blink. It is a liquid affair that can
only be controlled to a certain degree but never tamed with an assuring
finality. A perfect formulation of a trading strategy might be nothing but a
deceptive display. Murphy’s Law should therefore be
incorporated into our trading of forex as a reminder that we
should never risk more than what we are comfortable of losing. This is the
general rule of thumb and must be observed no matter the certainty we hold on
the direction that a particular trade set up will take.
Learn to
gear up for the vicissitudes of the forex market’s treachery.
No one has mustered the forex terrain to a level that they will never suffer a
losing trade. There is therefore no justification for risking more than you
should per trade. If you are comfortable with risking $100 per trade then that should
be the case for every set up no matter your degree of certainty. We can never
be sure enough and the credibility of a trade set up can only be confirmed upon
achieving a losing or winning trade
What is
to go wrong will ultimately go wrong. Therefore always use a stop loss. A
bullish market might seem destined to greater ascendancy but it might
just spiral down at any moment and wipe away all the profits already made.
The stop loss ensures that the bunks of your portfolio are not broken no matter
how hard you are hit by the tides of a downward spiral. In forex, stop loss is
a safety measure that limits the damage if a trade goes against us.
Do not
wait for the exact top or bottom of any trade. Be satisfied with the attainment
of your preferred risk reward ratio. Quit when the circumstances are in your
favour. Waiting to attain more than you bargained for is a show of greed and a
reflection of your ignorance to the uncertainty associated with the forex market.
Plan your exit before the entry. Waiting for the exact top or bottom betrays a
lack of strategy and a failure to appreciate the fact that anything can go
wrong at any moment.
Anything
that can go wrong will go wrong so there is no need of opening more than one
position for a single trade. You will end up losing on two fronts from which
you might never recover. Do not bet on two positions because all the hype of a
racing market is just a mere passing wind. The forex market is a moving stream
that erodes our reality by paying little attention to our desires. Treat the
markets with contempt by trading only one position. Do not feed it more than it
deserves for it has a bad habit of biting the hand that feeds it.
Conclusively,
be wary of trading without a stop loss, risking more than you should and
waiting for the exact top or bottom of a trade set up. You can never bet on the
market’s certainty. All conditions may seem appropriate or conducive to make
money, but that is only at that moment. Remember, if anything can go wrong --
it will.
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