The following is a post I came across on a trading forum not too long ago (can’t recall which one at this point). It speaks to a couple of important topics new traders face all too often.
Just started a account of 2,000 us dollars . Before I did I played on the practice account and made a 50k account to 100k in 13 days. I was confident in winning if I started a real(live) account. My first day I made a 220 dollars roughly and 130 pips . Second day I lost 80 dollars . And today which is my third day isn’t going well . I need advice in what to look at and how to come to a good conclusion . What I look at is low and high of the day and news feeds then I buy according to info I gather .
How many mistakes can we come up with from this trader’s story?
Here’s a good start:
- He believed 13 days of demo results was a significant sample size upon which to base a judgement.
- His risk on his demo trading was much too high as indicated by the 100% gain in such a short period – unless he was just extraordinarily lucky, in which case, see #1.
- He may have put too much money into live trading, though I can’t say that for sure. It depends on what $2000 represents in his financial position. I’m all for getting to live trading quickly, but I’m also for doing so with as little money as you can get away with.
- The risk he took in live trading is likely too large as shown by an 11% gain his first day.
- He went into live trading without a confident plan, as indicated by his request for help with his strategy after only a couple of days of losses.
I’m sure you can come up with others, and if so, post them below in a comment.
This forum post, to my mind, is just another example of a trader who got way ahead of himself. He never took the time to really develop a plan for his trading, leaving him in that all-too-common situation of feeling the need to jump to a new idea or strategy when the current one seems to be faltering.