MartinK
Recruit
- Messages
- 2
in my experience i have found that they don't know what 1% is to begin withYou can easily hold are breakeven levels if you honor basic rules of money management, for example risk no more than 1% from your capital. Trading becomes easily manageable and I really don't understand traders who start to gamble and then say forex is highly risky business.
Example :
Retailer Trader starts Trading EURUSD for example, with account balance of $400 for example
doesn't know what a LOT is
Doesn't Understand how Nominal Margin works
and let's not even get into leverage
so, they hear through the grapevine that 1% is the ideal risk level
so. they do this
1% x $400 = $4
but then the following happens
1. they don't understand the relationship between the 1% Calculated Loss vs a Stop Loss and where it is placed
2. they don't understand that Moving the stop loss lower (on a buy) and conversely on a sell affects this %
3. they usually have no clue as to what Nominal Margin is,
so let's say that their Nominal Margin is $300 to enter the trade and yet they think they are risking 1% hehe
when i fact they are risking more like 80%ish of their account
Best Case Scenario, they think they are risking 1% which is say $4 from their $400
Meaning they have $396 Remaining
however they actually end up risking, like $7 and THEY DON'T SEE IT AS A BIG DEAL, but what they dont' understand is this is nearly 2% of their risk
meaning... if 1% was the risk, they are able to lose 100 Trades in a row
with a 2% risk THEY JUST HALVED THAT NUMBER without even realizing it
and the reason why this happens is.. THEY LACK BASIC FOREX EDUCATION and Basic Mathematical Skills