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MONEY MANAGEMENT


wrong and I need to get out of that car. Tere is no reason for me to wait until the car touches the bottom of the lake to put an end to the experiment – at that point it’s too late.


Te


of this hoping strategy


evidence is


staggering. In


preparation for this article, I requested and reviewed a random sampling of open positions of our clients from several of


our brokers.


Out of the 150 accounts in the sample, these were the results:


Mike Tyson once said, “everyone has a plan until you get punched in the mouth.”


Results from a sampling of 150 accounts open positions: Total number of open positions


Total number of losing positions Total number of winning positions Average losing trade value Average winning trade value


Average duration of a losing trade Average duration of a winning trade


What can we learn from this data: 1. Retail


more than 4.5x longer than the average winning trade.


FX


hoping for them to come back in their favor. Maybe the position will, maybe it won’t. But for 91 days, you’ve missed other oppor tuni t i e s in that currency pair because you couldn’t take the loss and move on.


Taking A Loss Is Part Of A Winning Strategy


Te best traders in the world lose – and lose thousands of times over. Losses are part of trading and this.


they But


know they


have a plan and stick to that plan because over time


1,133 984 149


($312.48) $41.68 91 days 20 days


traders’ open positions are


losing money 87% of the time 2. Te average losing trade is more than 7x as large as the average winning trade 3. Te average losing trade is held


Tere is a joke among brokers about what happens to traders when a position goes against them – they stop becoming traders and start becoming investors. Te joke being that they stop trading and just hold their


losing positions


it yields results. Tey don’t get hung up on losing trades or let them blow up their accounts. Tey close them as they had planned, move on to scanning for the next opportunity and refocus their minds. I’ll say it again, losing is a part of trading. But, losing an entire account because you refuse to cut a losing position is just dumb. If you want to improve your chances for success in trading, cut your damn losers and find your next winning trade.


Justin D. Hertzberg, Esq; CEO


Forest Park FX FX TRADER MAGAZINE October - December 2018 33


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