Drug traffickers often use insidious strategy to get new customers. They provide free samples of their products to children as a candy bar or candy stick. A lame number of drugs covered sweet and the kids hooked, often for life. Speculative markets can operate both in the same way, except in the financing of the drug of choice is leverage.
How many times do we see advertisements on the web with tempting offers ridiculous traders to take advantage of 100:1, 200:1, 300:1 to 500:1? The lure is very tempting – make $ 1000 in $ 100,000 in a matter of weeks! Take $ 10,000 and trip to a million! Like a drug high, a high level of leverage that promises happiness for life, but actually provides above all the agony and pain. The truth of the matter is highly leveraged in speculative markets is much more common to see accounts of $ 100,000 to $ 1.000 shrivel rather than the reverse.
Take medications as taking control of their hands. The influence using the more vulnerable you become. How many times have you been taken out of a trade that was recovered simply because they over-leveraged? The margin call is the secret weapon of the market. It’s the easiest way for the market to take their money because it forces you to liquidate their position in the worst possible time, often at the absolute bottom if they are better long or all if you are short.
My best trade astronomically when slashed my influence. Currently FX trading that investors just as the populations of the trade with my positions not exceeding 50% margin or leverage of 2:1. For the majority of FX traders that sounds ridiculously small, however, I’m trading more than ever and enjoying my best month of the results in terms of performance against retirement. Reducing leverage is not why I’m killing on the market this month. My flow analysis has simply been much sharper and more white. However, the fact that my analysis has been better this month has to do with my low level of leverage.
At the small store, of course, execute my plan, with stops quickly rather than let the losers run. Small stops are easier to accept psychologically and also much easier to recover. In almost no influence trade tend to trade much more professional my risk management without emotion as I am not vulnerable to a loss of highly leveraged.
Like a junkie who has started his practice and has a clean life, I’ve weaned leverage. The net result is that both my mind and my business account is much better.
