Trading & Leverage
We know we use somewhere around 10% of our brain power at any given time. Now imagine if suddenly the other 90% of your brain clicked on at once. Rather than enjoy being beyond genius, you would likely go mad from the sudden and constant rush of your sensory perceptions throttling out of control. You would be completely confused as your senses and perceptions exploded exponentially. The reality of your life and that of everyone and everything around you would hit you like a laser and it might be a terrifying and confusing experience. It seems to me that’s what happens to people the first time they control a $100,000 asset in a $5,000 account and call themselves a trader. It’s like the other 90 something percent of their brain lights up and they freeze, or worse. It’s not a natural thing to be able to make a few percentage points a day on your money with a few strokes of your mouse. Likewise, there is the reality that if you don’t know what you are doing you can lose your hard earned money. The trader Bill Williams, who holds a doctorate in psychology, talks about how trading is the most intense psychoanalysis we can go through, and insists that if we have problems in our life, they will be magnified -think leveraged – in our trading.
Have a plan, know it inside out, stick to it always, and plan on demo trading for at least 3 months more then you initially planned on.
Jay Norris is the author of Mastering the Currency Market, McGraw-Hill, 2009, and a trading instructor at Trading-U.com
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments.