 04-01-2006, 11:52 AM
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asimon
Joined on 03-07-2006
Posts 140
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Rapid Forex e-Course Day 13
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===================================
"The Rapid Forex e-Course"
--> a 20-part mini-course series
Published by:
Abundant Freedom, LLC
http://RapidForex.com
===================================
To DOWNLOAD the "Insight Trader Package":
follow the instructions on the page below:
http://rapidforex.com/dlInsightV100.shtml
To See the e-Course Table of Contents:
http://rapidforex.com/ecourse.shtml
LESSON #13:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-~
Equity Management & Margin Control
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-~~~
Because we're readily admitting that YOU will pre-judge this
Lesson, based off its title above, as boring and quickly
dismiss it as "something I've heard before" (hey, didn't we
tell you we KNOW human nature), we're going to go ahead and
make a....
A VERY BLUNT IN-YOUR-FACE KINDA STATEMENT (not to offend
you, just to keep you paying attention) and then TELL YOU A
GRUESOME STORY. First the straightforward comment:
>>> 95% of the successful (full-time, well-paid) FOREX
Traders we know feel that money-management is more important
than the trading. And, it's so, so important to us that we
believe if you don't grasp, and follow, the basic rules
below, YOU WILL FAIL! (Hey, don't take this personally. It
is what it is).
Okay, on to the story.
===================================
Bloody Tale of Vicious, Senseless
Animal Slayings Guides FOREX
Traders to True Wisdom.
==================================
A donkey, a lion, and a fox decide to go out hunting for
rabbits. After a pretty good day of hunting, they had
collected a large pile of rabbits. The lion says to Mr.
Donkey, "I'd like for you to divide the rabbits fairly among
the three of us."
So, the donkey took the rabbits and made them into three
equal piles and said, "How's that?" The lion immediately
pounced on the donkey and killed him.
Then the lion threw all the rabbits on top of the donkey and
made one big pile. The lion turned to Mr. Fox and said, "I'd
like for you to divide the rabbits evenly between the two of
us." The fox walked over to the pile of rabbits and took one
little scrawny rabbit for himself and put it in his pile. He
left the rest of the rabbits in the large pile and said,
"That pile of rabbits if for you, Mr. Lion."
The lion said, "Mr. Fox, where did you learn to divide so
evenly?"
And the fox replied, "The donkey taught me."
===========================
The Moral of the Story ?
Well .... it seems quite clear it is this: if you can
learn from your own mistakes, you are smart. However, if you
can learn from others' mistakes, then you are wise.
Yup, we agree with this. And, by reading the listed rules we
have below to share with you, you will accelerate your
profit-making potential in your own FOREX trading business.
You're about to read the combined wisdom of various traders
who have "been there, done that." Traders who have
experienced setbacks, challenges, and turned those temporary
failures into successes. We've paraphrased these timeless
rules (do's and don'ts) into our own words.
WELCOME ABOARD asc .... you're about to
experience the thrill of hunting rabbits with a FOREX Lion.
However, in this case, you won't get killed :-)
======================================
Equity management and properly handling leveraged margin
accounts is the most significant part of any trading system.
Again, most traders just don't understand how important this
aspect of running a FOREX business is. The ones who DO know
understand that it is the critical point that separates the
winners from the losers.
It was proven that if 100 traders start trading using a
system with 60% winning odds, only 5 traders would be in
profit at the end of the year. In spite of the 60% winning
odds 95% of traders will lose because of their poor
management of account equity.
But, the good news is, you don't have to be a mathematician
or understand portfolio theory to manage risk. This can be
as easy as following these rules.
>>> RapidForex.com RULE #1: Thou shalt not risk more money
than thou can afford to lose (Also known as "if you can't
afford to lose, you can't afford to win.")
Let's face it - this isn't bean ball. You will lose money.
ALL traders loose money. Stop right here, delete this email,
forget about trading currencies, do something else with the
rest of your life if losing a portion of whatever money you
might trade with would take food off your table, keep your
kids from going to college or change your lifestyle. Repeat:
there is no system or approach available that doesn't
sustain losses sometimes. The trick is containing those
losses.
>>> RapidForex.com RULE #2: Thou shalt never risk more than
2% of your margin account on any SINGLE trade (if you have a
Mini Account, you may bend this to 5%).
For example, if you have $300 in your account, 2% is $6,
equal to a 6 pip move. 5% is $15 or a 15 pip move. With a
Mini-account, realistically your risk-per-trade has to be a
bit higher than those who trade a 100K (regular) account.
Once you get your account equity to $1000 or more then
definitely limit your risk to only 2% of your margin account
on any SINGLE trade.
>>> RapidForex.com RULE #3: Thou shalt always, Always,
Always Use a STOP-loss order.
When you place a STOP order, right along with your ENTRY
order, via your online trade station, you've just
automatically prevented a potential loss from "running" too
far.
Before initiating any trade, if you haven't already figured
out at what point you would be wrong and would want to cut
your loses or, at the very least, reevaluate your position
from the sidelines, then you shouldn't be putting on the
trade in the first place.
Show us a FOREX trader who doesn't use stop loss orders and
we'll show you someone who loses a lot of m.oney.
>>> RapidForex.com RULE #4: Thou shalt predetermine your
exit point BEFORE you get into a trade.
To use a football analogy, if you don't know where the End
Zone is what's the point in walking up to the scrimmage line
to make a play? In other words, when you place a LIMIT
order (or, at least mentally place it), you're telling
yourself, and the rest of the market, that you understand
the game plan, the big picture, the reason for being on the
trade (the football field) in the first place. It is prudent
to let profits run and follow a market with stop orders in
a trending market. It's the wisest of traders who put
such a limit on their trading (profit-taking). Because of
Greed, it is always more difficult to make a decision to
take profits than to enter a trade. We don't want you to be
the one who says, "If only I had sold when...." Know your
exit strategy / game plan and this won't be you.
>>> RapidForex.com RULE #5: Thou shalt paper-trade first.
First open a DEMO account and get to learn how to place
orders with it (we cover this in detail in Lesson #11). You
shouldn't invest real money until you have shown a profit in
a DEMO account. Many people have losing DEMO accounts and
still believe that it will be different with real money.
Wrong! As mentioned in Lesson #11, the only thing different
between a DEMO account and a LIVE account is, with a DEMO
account, you'll tend to be less conservative and
lackadaisical with the rules. If you lose paper trading,
what makes you think you'll win with real money?
>>> RapidForex.com RULE #6: Thou shalt take a Breather when
your Core Equity is significantly down.
First of all, you should understand the following term "Core
equity." Core equity = Starting balance - Amount in open
positions. If you have a balance of $10,000 and you enter a
trade with $1,000 then your core equity is $9,000. If you
enter another $1,000 trade, your core equity will be $8,000.
Assuming you lost money on each trade, your core equity
certainly won't be where you started it with. If you lose a
certain predetermined amount of your starting capital (e.g.,
10 percent to 20 percent), take a breather, analyze what
went wrong, and wait until you feel confident you have a
high probability trading idea/method/system before entering
the market again. Remember, the goal is to MAKE money, not
lose it.
>>> RapidForex.com RULE #7: Thou shalt not let thy emotions
rule.
This is probably the hardest rule to keep. Yet, we have
never seen a successful trader over the long haul that
didn't follow it. Most people want to be winners. Most
people want to make the big score and have the accompanying
bragging rights. We all tend to get greedy, traders usually
more so. But trading is a business. It's hard work. You must
be cool, calm and always ready for the next opportunity.
You can't have emotionally high highs or emotionally low
lows because you'll make too many mistakes, and mistakes
mean losses. If you start winning and get "too high," the
tendency is to over-trade. By that, I mean starting to make
marginal trades or "seat-of-the-pants" trades just for the
sake of making trades, instead of waiting patiently for the
right opportunity. If you get too low (this is usually after
some losses), you are liable to skip the trades you should
be making, or you might try to "cherry-pick" a system or an
advisor's recommendations for fear of more losses,
inevitably making the wrong choices. To win this game you
must remain patient and clear-headed.
=========================
Finally, to finish this lesson up, we have TWO basic rules
about winning in the FOREX as well as in life: (1) If you
don't bet (trade), you can't win. (2) If you lose all your
chips, you can't bet (trade).
Think about it. Hard once. Then softly twice if you have
too.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Stay Tuned for tomorrow's email from us. It will have
the following Subject line:
asc, Lesson 14 - The Rapid Forex e-Course
20 pips to 200 pips: Small Trades to Big Trades
and Somewhere in Between. We'll explain tomorrow.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Health, Happiness & Prosperity,
Robert Borowski & Brian Campbell
Abundant Freedom, LLC
http://RapidForex.com
--------------------------
To DOWNLOAD the "Insight Trader Package":
follow the instructions on the page below:
http://rapidforex.com/dlInsightV100.shtml
Inside the "Insight Trader Package" you'll receive:
*Forex Freedom
*10% to 30% Monthly R.O.I.
To See the e-Course Table of Contents:
http://rapidforex.com/ecourse.shtml
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
"The Rapid Forex e-Course" is published by:
Abundant Freedom LLC
Visit us at http://RapidForex.com
This publication may be fre_ely redistributed if
copied in its entirety, as long as you do not claim
ownership, or alter the content in any way.
Copyright (c) 2004-5 Abundant Freedom LLC.
The information in this e-Course is provided for
educational purposes only. This information is
offerred as-is, with no warranty of any kind. While
Abundant Freedom LLC, and the author of this e-Course
have taken reasonable measure to assure the accuracy
of this information, the information is not guaranteed
to be accurate, and is subject to change at any time,
without notice.
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
Abundant Freedom LLC
758 Kapahulu Ave #335
Honolulu
Hawaii 96816
United States
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