Content source: Wechat public account Huiclassroom
"Trading is like a marathon. The test is not explosive power but sustained power." A Huiyou expressed this emotion after experiencing liquidation, breaking even and continuing to make profits. Let's call him Jonson for now.
As early as in college, Jonson was passionate about looking at charts on his mobile phone.
Three years ago, he went on a trip and saw a group of foreign tourists trading currency pairs, and the exchange rates of major currencies such as the US dollar, the euro, the pound, and the yen were displayed on a shiny LED display.
"I think it's interesting to trade currencies, to buy a currency that appreciates or sell a currency that depreciates," he said.
Jonson already had a certain understanding of the stock market before, so he thought he could also control currency trading, so he opened a foreign exchange trading account, but he didn't expect that the road to continuous profitability would be so long.
choose a broker
At that time, Jonson didn't know much about brokers, spreads, leverage and margin in the foreign exchange market. He only knew that he needed to choose a broker before he could trade. So he simply screened a broker and opened a trading account.
This was the first mistake he made in his trading career, and he later realized that the first broker provided higher spreads and leverage, which contributed to his first liquidation.
At that time, he focused on fast-in and fast-out transactions. He used more than a dozen technical indicators in an ultra-short time period, and his positions were also very large. It is conceivable that most of the transactions are loss-making.
A small number of winning trades are also eating up most of the profits by the broker's high spreads. Even later learned that this broker is not regulated by regulators.
These mistakes are also common to most novices. Jonson said that without these mistakes, he would not be able to succeed in the end.
Choosing a reliable broker is the beginning of success on the road to foreign exchange trading. If you choose wrong at the beginning, you are doomed to start all over again.
Jonson's real trading career can be roughly divided into the following three stages. He believes that all traders are the same, and each stage is essential.
The first stage of trading: liquidation
A survey on traders shows that 40% of novice traders will blow up their positions within a month, and Jonson is one of them. It has also been mentioned above that he does ultra-short-term trading, with high leverage, large positions, and no fixed trading strategy.
To sum up, over-trading and lack of certain money management skills are the main reasons for his liquidation. He also said it was easy to be overly ambitious in the first few trades, and after a few winning trades he thought he had mastered the trade, only to end up with a margin call.
Most traders will lose their first account very quickly, but that's okay, the important thing is to learn from your mistakes.
After the first account was liquidated, Jonson did not leave the market disappointed. It was precisely because of his strong interest in the financial market that supported his goal of continuous profitability. He started to learn through tutors and books, found a trading tutor on the Internet, participated in training regularly, and purchased more than a dozen classic trading books to learn knowledge including technical analysis, fundamentals, trading psychology and risk management.
In order to practice the technical knowledge he has learned, Jonson opened a demo account with another broker, mainly using 1-hour and 4-hour time periods to practice trading, and developing trading strategies with special emphasis on risk management.
And more focused on studying price trends, chart patterns, K-line patterns, finding important positions with the help of support and resistance levels, practicing trend tracking techniques, etc.
And learned to make a trading plan, strictly follow the trading plan for each transaction, do not enter uncertain transactions, and control the risk within an acceptable range for each transaction.
So seeing that his performance in the trading market is becoming more and more mature, Jonson's trading journey soon came to the second stage.
Phase 2 of the transaction: break even
Jonson re-entered real trading after practicing trading in a demo account for a few months.
This time was different. He went back online with his failures and months of learning, and soon found that he could make ends meet in the transaction.
"Although I didn't make any money, I still feel great, because I know that I may only need to make small adjustments in my trading strategy, and I'm not far from making money." Jonson said confidently.
But it is not so easy to make a profit in the trading market. Unfortunately, Jonson later lost a lot of money in his account because of a wrong judgment. Wanting so much to profit in the market, he decides to make a big bet on GBP/USD ahead of an important report.
This level is a test of trading psychology, because he was too greedy, he almost lost his second account . Fortunately, with good risk management, he still has some funds in his account, so he has passed this level.
The third stage of trading: continuous profit
After experiencing that risk, Jonson began to implement his trading plan more strictly, trying to find ways to resist the interference of greed and fear on the transaction.
And adjusted his risk management rules, because he found that he was taking a $1 risk to get a $1 profit, so he could only maintain a balance of payments. He then adjusted to always have less risk than potential profit, which allowed him to start making consistent profits, hitting his profit target every time.
I always remember him saying, "Trading is a marathon game, and we should focus on continuous accumulation and not let accidents interfere with him. He wants to continue to participate in the game in the future."
From Jonson's trading journey, it is not difficult to see that everything is difficult to trade at the beginning. In fact, if you can pass the first stage, the remaining two stages are not difficult to reach. However, if you don’t want to be eliminated by the market in the future, you still need to pay attention to protecting the capital you rely on to survive in the market, and then continue to accumulate.
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