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MONEY MANAGEMENT by Justin D. Hertzberg


FX CUT YOUR DAMN LOSSES


FX trading is hard. We have all heard the statistics and now, with European brokers, we can see the percentages of FX traders who lose money right on their websites. Some sites are even indicating that the number of traders who lose money is over 80%. Tere are many reasons and arguments that can be made as to why the majority of FX traders lose money.


As an introducing broker to thousands of traders from around the world, I’ve seen the good traders and bad traders. And in my view, the single largest contributor to client losses is simply


risk management.


When it comes to trading, no one has a crystal ball. We can’t predict the future – we can only make informed trading decisions based upon the information available to us. But what does that mean as a trader? Well, if we can’t control the direction of the market, the only things we can control are when we enter our trades and when we exit them. Te problem for most retail traders, however, is that they don’t or can’t exit a trade once they’ve put it on. And this is their downfall.


Fail to Plan. Plan to Fail.


Everyone has heard the adage “fail to plan, plan to fail” and most traders (even novice FX traders) have some kind of a plan when they enter their trades. Usually (hopefully) they can tell you why they bought or sold a pair, where they expect the market to go and when/where they will likely take a profit or cut their losses.


In the moments aſter traders click that button to buy or sell, however, logic and reason go out the window. Why? Because few trades are instant


FX TRADER MAGAZINE October - December 2018 31


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