Focus on the percentages
Beginner traders generally focus on the amount of money they earn in case of winning trades and the amount they lose in case of losing ones. Although this is understandable at the beginning, it can be harmful to your mind.The pain threshold of the amount of money a person wins or loses is of course relative. A thousand dollar loss may be nothing for someone or it can be a lot for someone else. Watching numbers can be quite impactful. A better way to look at profits and losses is in percentage terms. Let’s say you have a 100K account and you risk 1% on a trade. The more your account grows, the bigger that 1% will become. If you watch the nominal amount, you might feel inclined to reduce your risk the more your 1% grows. This action not only hinders your progress, but it can also cause pain when you experience losses. If you only look at the percentages, they will always look the same and it will diminish that pressure you may have when you focus on the nominal amounts. This article was written by Giuseppe Dellamotta at www.forexlive.com.
Beginner traders generally focus on the amount of money they earn in case of winning trades and the amount they lose in case of losing ones. Although this is understandable at the beginning, it can be harmful to your mind.
The pain threshold of the amount of money a person wins or loses is of course relative. A thousand dollar loss may be nothing for someone or it can be a lot for someone else. Watching numbers can be quite impactful.
A better way to look at profits and losses is in percentage terms. Let’s say you have a 100K account and you risk 1% on a trade. The more your account grows, the bigger that 1% will become. If you watch the nominal amount, you might feel inclined to reduce your risk the more your 1% grows.
This action not only hinders your progress, but it can also cause pain when you experience losses. If you only look at the percentages, they will always look the same and it will diminish that pressure you may have when you focus on the nominal amounts. This article was written by Giuseppe Dellamotta at www.forexlive.com.
