Podcast:
 

Why not looking at your account balance can be beneficial to your Forex trading results

In this video:

01:32   Having controlled low risk

03:15   Taking all the emotions out of your trading

04:13   Made a total of 2.3% on a 1-hour trade

05:18   The Lesson: Forget about making pips

In today’s video and podcast I’m going to explain to you why not looking at your account balance can be really beneficial to your Forex trading results. Let me share more details with you right now.

Hi Traders, it’s Andrew Mitchem here from, The Forex Trading Coach and today, is Non-Farm Payroll day. It’s the Friday, the 3rd of October so be really careful with your trading into the U.S. session today with that U.S. job employment data news coming out later.

Don’t Look At Your Account Balance

But the main point that I want to carry on in today’s video and podcast is why I think it’s really beneficial and how it can help you with your trading, with the emotional aspect of your trading and the psychology behind trading by not looking at your account balance when you’re taking trades.

Now, what I mean by that is, a couple of things depending on which side you are. If you have a relatively small account it becomes really quite easy in destracting and that a lot of people like to take too bigger risks.

You know they say, “Well, I’ve only got a thousand dollars, it doesn’t matter if I lose it therefore I’m going to take “x” amount of risk.” And it might be something that might be risking let’s say $100 on a particular trade. Now if you’re doing that you’re actually risking of course 10% of your account which is far too much. So rather than doing that I think it’s far more beneficial to forget what your account size is right now and look at trading an equal amount of risk per trade and having controlled, low risk. That’s the important thing.

So when I’m trading myself I trade at no more than 0.5% so half of 1% of my account risk on any one trade. That’s the maximum I can lose. I know that in advance but it doesn’t matter what the currency pair is, what the type of trade is, what the time frame of the trade is whether it’s reversal or continuation, it’s a breakout, whatever it is, it doesn’t matter how many pips the trade is risking. If it loses it doesn’t matter how many pips the trade loses because I know I have a set amount of risk, an equal amount of risk in every single one of my trades and that really helps you with the understanding, the psychology, the emotions of your trading.

Take it to the other extreme. If you’ve got a large account let’s say you had a million dollar account. The trouble is when you’re looking at your account balance all the time, is that, the emotions come into it in a different way and it makes you hesitant, it makes you really, “Well, do I take the trade, should I close the trade early?”. You become really hesitant because you could see it your account going up in hundreds or thousands of dollars up and down all the time and it’s very easy to want to take the trade in terms of taking the profits slightly early or meddling with the trade too much. Whereas if you know you have a set amount risk on that trade, again half of 1% (0.5%) then you become comfortable with the trade because you’re not looking at the dollars or the pounds or the yen whatever your currency.

You’re not looking at the amount you’re making, you’re looking at the percentage that you risk as opposed to the percentage that you make on a trade as a far better way of trading. It takes all the emotion out of your trading. So it’s a really important point there.

In terms of percentages we’ll I had a live webinar, (2 ½ hour live webinar) with my clients last night. I had a client who’s been with me for just over 3 years now. He lives in Canada,