The other day, three of us went horseback riding in the sandy hills just off the ocean. The trail we were riding is named Rattlesnake Canyon trail. Sitting there on the back of my quarter horse, I thought about the fact that I had never seen a rattlesnake on the trail, even though I had been on the trail many times before. Well, just after joking about this with the other two riders, the rider in front pulled up sharply and her horse spun quickly, right into my horse and me on the narrow trail. I pulled us out of the way enough so she could get her horse under control. She did and then announced, “There is a rattlesnake on the trail.” Sure enough, there it was, all four feet of it, half on, half off the trail. So, I dismounted, picked up a long stick, walked up to it, and poked it. It immediately coiled, rattled threateningly, and then slithered away. And this leads me to the email below.
I’m new to this site but not new to trading. I do forex and I have been doing a demo account for a couple of months now, very successfully. I’m making a transition into real money next week, What should I be thinking and doing to preserve my capital and my sanity?
Keep these points in mind.
1) Stay vigilant. Today’s market is subject to sudden and swift changes because of the uncertainty and the hangover from the disaster in 2008 combined with the erratic emergence from the global recession.
2) Take nothing for granted. Things are what they are for a reason. So, look to what you know and trust that. Keep in mind you have been making decisions with “play” money. You may well find that when your money is on the line, you just might be less decisive, less of a risk taker, and more dubious.
3) Accept losses and move on. The first time you lose some real money, you will experience the emotion of loss. Deal with it, and then shrug it off.
4) Accept wins and move on. The first time you make some real money, you will experience exhilaration. Deal with it and then shrug it off.
5) Protect your money. Be decisive when you encounter problematic trades. Cut your losses quickly and move on to the next trade.
Trust me, you will encounter one of the many natural problems found in the trading world. In a calm, deliberate, and careful manner, simply get off your horse and take care of the problem. Keep in mind, when a nasty snake is blocking the trail, one alternative is to sit there not moving forward, waiting, hoping the issue will slither away on its own. Another is to turn around and go back from where you came. Still another is to take of the problem and move on. As you move through the process of trading real money, you will quickly find out which option you will choose when the unexpected happens, or when things don’t go your way.
Trade in the day; invest in your life …
