In one of my recent articles I have mentioned that along with trading in the small charts, the next reason why you lose money trading is you. That's right. You are the problem. Eliminate YOU, add a decent technique and you are on your way to the stars.
Eliminate you? Let's look at what happens in a typical trade executed by a novice but properly trained trader.
As I mentioned you already got some professional training and like any good student you do your homework - learn the theory, find a nice little technique, practice alongside an expert in a demo account and see that it is possible to make money. You are now a true believer and the master of the secrets - you know the tricks, you can anticipate every move the market makes. Am I still talking about you? If not – stop trading and get back to the training part.
So you know your stuff and it is your live account today. You wait for your setup, the market comes to you and the order is placed. It even happens to be a perfect textbook example. Easy money is on the way and you are pleased with yourself. The P/L line shows that you are at negative 2-3 pips but you anticipate covering that spread cost in the next few moments and then it is an open road to the much deserved profits. You are confident. Your technique is sound and proven. It works as you've seen and practiced. You even have the next most important piece of the puzzle – the sound money management in place. Your conservative risk is at maybe 1 – 2% of your equity available. You are 100% confident that this is the beginning of your financial freedom. No doubt in your mind and you deserved it - You've paid your dues.
It is now 2 hours or 2 days later and you have lost; many trades. Sure, the market DID what you had predicted. Many pips have been made – But not by you.
So what happened?
Even though you have the "know how" and the practical experience to go along with it, the fact remains that the market can not be 100% predictable. In the back of your head there is always a fear that you might lose in this particular transaction. At some point you will lose. You may have tens of trades that are positive and profitable, but sooner or later one of the currency pairs will get you. Your problem is that you seem to lose every time. The reason: in your mind you carry over the fear of that one bad trade that is going to come at some point to EVERY trade you do. You were supposed to lose only here and there, but the fact remains that every next transaction carries the same risk of going against you no matter how small that risk is. This is in the back of your head and not knowing when the bad trade will come, you over react to any small deviation of the trade from your projection.
So, your fear of losing turned a great profitable trading technique into an account killer. The source of your fear is that the money you have funded your account with was not the money that you could afford to blow just like most of the novice traders. You did not have the luxury to allocate the trading money in your "business plan" as write-off money that is insured or that can be a tax deduction. Oh no, in your case the only deduction is directly from your pocket.
The solution: If you learn anything from me learn this - NEVER MOVE YOUR STOP LOSS UNLESS YOU ARE IN POSITIVE, (similarly, never close your position prematurely - let the market close your position instead). Remember, when you set your stop loss, it is that money that you are prepared to lose. Think of it as lost before you even enter the trade. If you still fear it, then reduce your lot size until your potential loss is so small that you do not care. Do this and you will be surprised how quickly the profits will come. Of course, if you hit your stop loss every time than you just don't have a clue how to trade.
Saturday, September 6, 2008
Stock Market Driving You Crazy? Diversify Your Retirement Portfolio with Truly Self-Directed IRAs
Stock Market Driving You Crazy? Diversify Your Retirement Portfolio with Truly Self-Directed IRAs
Not seeing your retirement funds increasing? The volatility of the stock market can make it difficult to determine which stocks and mutual funds will consistently grow your nest egg.
Do you wish there were other options when saving for your future?
There is – a truly self-directed IRA. A truly self-directed IRA allows you to have total control of your retirement investments. That means you can invest in real estate, promissory notes, mortgages, deeds of trust, tax liens, equipment leasing, mobile homes, private placements, limited partnerships, limited liability companies and foreign exchange (forex).
Brian Harris, an investor at self-directed IRA custodian Equity Trust Company, used his self-directed Roth IRA to invest in something he had a passion for, musical instruments. By using your knowledge and expertise you can invest in the assets of your choice in a self-directed IRA and prepare for your future and your family’s future.
Learn to Create Tax-Free Profits for Life with a Self-Directed IRA
Not only do you have more freedom with a self-directed IRA, but self-directed IRAs also provide tremendous tax benefits – including tax-free investment profits. One of an IRA’s greatest features is it allows Americans to enjoy the true power of tax-deferred compounding interest. Compound interest occurs when interest is earned on a principal sum along with any accumulated interest on the sum. In other words, you are earning interest not only on your original investment sum, but also on the interest earned from the original sum.
Compound interest can occur with any investment you make, but the "true" power of compounding interest is obtained when you make an investment in a tax-deferred environment, like an IRA.
By taking advantage of an IRA’s tax-deferred status, you do not have to pay tax immediately on your earnings. Thus, you are able to enjoy the power of compounding on ALL of your profit, not just what is left after taxes.
Investors Have Been Taking Advantage of Self-Directed IRAs for Over 30 Years…You Can Too
Successful investors have been investing in real estate and other assets with their self-directed IRA for more than 34 years. You may not know this opportunity exists because most IRA custodians do not offer truly self-directed IRAs that allow Americans to invest in real estate and other non-traditional investments.
Although it is possible to invest in a wide variety of assets, you should be aware of what investments are not allowed with an IRA. These include: artwork, rugs, antiques, metals, gems, stamps, coins, beverages and certain other tangible personal property. These have been stated by the IRS and cause tax consequences as well as possibly losing your self-directed IRA (please see IRS Publication 590 for more information).
Don’t Rely on Social Security – Start Saving for Your Future Now
According to the 2007 Retirement Confidence Survey by the Employee Benefit Research Institute, Americans are not prepared financially for retirement. The survey also revealed that almost half of workers saving for retirement report total savings and investments (not including the value of their primary residence or any defined benefit plans) of less than $25,000.
Don’t let yourself fall in the category of being unprepared for retirement. And don’t fall victim to thinking stocks and bonds are your only retirement investment options. A self-directed IRA provides freedom to choose investments you are most comfortable with and gives you amazing tax benefits. Now is the time to start investing with a self-directed IRA. The earlier you start, the more you will build for retirement.
Not seeing your retirement funds increasing? The volatility of the stock market can make it difficult to determine which stocks and mutual funds will consistently grow your nest egg.
Do you wish there were other options when saving for your future?
There is – a truly self-directed IRA. A truly self-directed IRA allows you to have total control of your retirement investments. That means you can invest in real estate, promissory notes, mortgages, deeds of trust, tax liens, equipment leasing, mobile homes, private placements, limited partnerships, limited liability companies and foreign exchange (forex).
Brian Harris, an investor at self-directed IRA custodian Equity Trust Company, used his self-directed Roth IRA to invest in something he had a passion for, musical instruments. By using your knowledge and expertise you can invest in the assets of your choice in a self-directed IRA and prepare for your future and your family’s future.
Learn to Create Tax-Free Profits for Life with a Self-Directed IRA
Not only do you have more freedom with a self-directed IRA, but self-directed IRAs also provide tremendous tax benefits – including tax-free investment profits. One of an IRA’s greatest features is it allows Americans to enjoy the true power of tax-deferred compounding interest. Compound interest occurs when interest is earned on a principal sum along with any accumulated interest on the sum. In other words, you are earning interest not only on your original investment sum, but also on the interest earned from the original sum.
Compound interest can occur with any investment you make, but the "true" power of compounding interest is obtained when you make an investment in a tax-deferred environment, like an IRA.
By taking advantage of an IRA’s tax-deferred status, you do not have to pay tax immediately on your earnings. Thus, you are able to enjoy the power of compounding on ALL of your profit, not just what is left after taxes.
Investors Have Been Taking Advantage of Self-Directed IRAs for Over 30 Years…You Can Too
Successful investors have been investing in real estate and other assets with their self-directed IRA for more than 34 years. You may not know this opportunity exists because most IRA custodians do not offer truly self-directed IRAs that allow Americans to invest in real estate and other non-traditional investments.
Although it is possible to invest in a wide variety of assets, you should be aware of what investments are not allowed with an IRA. These include: artwork, rugs, antiques, metals, gems, stamps, coins, beverages and certain other tangible personal property. These have been stated by the IRS and cause tax consequences as well as possibly losing your self-directed IRA (please see IRS Publication 590 for more information).
Don’t Rely on Social Security – Start Saving for Your Future Now
According to the 2007 Retirement Confidence Survey by the Employee Benefit Research Institute, Americans are not prepared financially for retirement. The survey also revealed that almost half of workers saving for retirement report total savings and investments (not including the value of their primary residence or any defined benefit plans) of less than $25,000.
Don’t let yourself fall in the category of being unprepared for retirement. And don’t fall victim to thinking stocks and bonds are your only retirement investment options. A self-directed IRA provides freedom to choose investments you are most comfortable with and gives you amazing tax benefits. Now is the time to start investing with a self-directed IRA. The earlier you start, the more you will build for retirement.
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