Starting to understand

I've been trading for almost 11 months now and have worked my way through around £20'000.

This week I dropped £2000, in fact at one point when the charts spiked down I had negative equity. Had I been trading with City Index I would long ago have been margined out but thanks to IG Index my positions remained open and I have recouped my funds, believe me when I say it feels like a win.

I have learnt through losing money that there are fundamentals to trading that are sacred. THE most important lesson is...........

Trade within your account size.

I have traded at £50 per point, this to me now seems madness as I have a maximum rule of £5 per point. That way I can survive a swing against my position and not have to sweat on every point. It's taken a painfully long time to learn this.

Stop losses are emotional, some traders swear by them, indeed they will never enter a position without one. I'm of the opinion that playing within your account size is more important. Many times I've seen a position go against me and margined out only to see it reverse and go in the direction I want it to but I've blown my account my playing too much per point.

This week was a prime example, I'm playing USD/JPY and was long when it retraced a couple of hundred points, I was £4 a point and was able to ride the drop and wait a few days until it passed my entry level and closed for a small profit. I shouldn't have gone in so heavy, £2 per point would have been more than adequate but thankfully I had funds to cover the swing.

Another vital lesson has been........

Choose exit points with great care. Wait and Watch.

I'm a technical trader although I do sometimes trade around news. I've been too eager to make the trade in an effort to harvest every precious point so now I wait for the next candle for confirmation, if I take a few points less so what? At least I'm right and not losing money.

Finally I've realised that although I hear anecdotal stories of people making thousands of pounds in a day I have set myself a reasonable and realistic target of withdrawing from my account £200 daily.

This helps me keep grounded and not chase the one bog trade that could blow my account AND it provides me with a goal that is attainable with smaller stakes.

May 24th marks my first post on this blog, by then I hope to have taken back a great deal of the money I have loaned my spread betting firm and be on the road to making a successful living trading.