Don't let a few bad trades ruin your trading account
In this video:
00:29 Solutions to Your Trading Problems
01:18 Trading Calculator: How does it work?
02:31 The Good News!
Don't let a few bad trades ruin your trading account. Let's talk about that more right now.
Hi Forex traders, it's Andrew Mitchem here, the The Forex Trading Coach. Today is Friday the 10th of July and I've got two items I'd like to share with you. One piece of good news and one piece of not so good news but also there's a story there of how I can help you.
Solutions to Your Trading Problems
Let's start with the bad piece of news first. It's an email that I‘ve had come through this week. It's not from a client, so it's from a non-client and the person said to me, “Look, hey Andrew, my trading's going reasonably well but what I'm finding is that every time I take a loss, it generally is a big loss and it completely wipes out all the gains that I've taken and my account goes from being growing okay to sort of back negative again. What can I do to prevent that?”
Really, it's a very simple solution. You see, the way that I trade, and you'd know that I trade this way if you'd been following me now for a number of months or even years, is that I have an equal risk on every single trade that I take and I've got a fantastic trading calculator that works on the MT4 platform that can really help you.
Trading Calculator: How does it work?
If you don't have a copy of that, just jump onto my website, look on the top of my website and there's a tab that says “Calculator”. Download that and store that onto your MT4 account, whether it's a live or a demo account, any broker it will work.
What that does, is it allows you to really easily get the accurate position size that you need on every trade that you take regardless of your account size, regardless of the direction of the trade, regardless of the currency pay, regardless of the stop loss of the trade, doesn't matter. All that is easily entered into the calculator. It takes like about two or three seconds to do each time you want to take a trade.
It gives you the exact position size needed to keep equal risk on every single one of the trades that you take. It's just invaluable and so it would actually eliminate the problem that this person had. There's no point in making lots of little, small, tiny gains and then you get one whopping big losing trade that completely wipes out all of that good that you've done. Get yourself that calculator it will just help eliminate all of those issues. I hope that really helps. That was the bad issue for the week.
The Good News!
The good issue for the week, and I'm pleased to say it's from a coaching client of mine, from a guy called Craig over in Australia. Craig sent me through an email this week and he said, look Andrew, I had a great week last week and what I'm doing is, I'm taking trades with the main trends, looking for pull backs, everything that you teach in the course. Last week Craig made an incredible 15.5% account gain with only half percent risk per trade, so every single one of those trades had equal control of risk, but he made a 15.5% gain on 16 trades in the week.
Ten winning trades, six losing trades, I think that works out around a 63% win rate on profitable trades. That's fairly good, it's not an 80 or 90 percent win rate and you don't need it. Now the reason why you don't need that is because I think Craig said that his average return per trade was around a 2.5 to 1 reward to risk, so if he had a losing trade, he lost, let's say if he was trading 1%, he'd lose one percent of his account and if it was a profitable trade, the average trade made 2.5%. Divide those figures in half, because Craig was taking only a 0.5% risk per trade, but an amazing result. 15.5% just in one week on a live account by having very low controlled risk.
I hope that those two work together really well.
1. You can see, why you need to have controlled risk.
2. You can see that when you have controlled risk and you have high reward to risk ratios within your trading, the results that can be achieved.
If you'd like to know more, jump onto one of my webinars. That's what I suggest that you do. Have a look onto one of those webinars. I hold two each week. One is for new traders, one is for more experienced traders. Jump onto one of those and I can fill in a lot of details with you and help you along your trading journeys.
That's it for now. Have a great weekend and I look forward to catching up with you this time next week. Once again, this is Andrew Mitchem, the Forex Trading Coach.