Every trader you meet will tell you about their most memorable trade. Many remember the trades that made them ‘successful’ or put their account on the map, but few will speak freely about their biggest losers. Why? Because not only is it painful, it is also embarrassing to think that such a seasoned trader could make such a big mistake.
Once you reach a certain level of success, that is when you have transitioned from the rookie with a million questions to the always evolving studious novice trader, you realize that the biggest losers should stand out more than your winners.
Whether they care to admit it or not, every successful trader remembers their biggest losers because they force you to learn so much about your strategy and self. Do you know exactly when to cut a trade? If so, how good are you at executing that? It is almost like clock work that these losing trades come around. You will be taking profit trade after trade, week after week, and sometimes you even start measuring your success within the last few weeks or months as your eyes sparkle. Then your favorite trade, with that perfect catalyst appears. Without taking the time to double check all your rules you jump in with flawed research.
After a few hours, or days you realize it was not a wise move but instead of getting out of the trade and taking a 3% loss you just sit there and watch. I am sure you all have looked at the economic calendar hoping that the next announcement will turn the trade in your favor. But it doesn’t and you end up losing +10% of your account. Forex money management is the most essential part of any successful trading plan.
What to learn from this trade:
1) Never jump into a trade without making sure it meets all your requirements.
2) Just because the currency cross was good yesterday, does not mean it will be good to you again.
3) Money management is king in survival and successful trading.