14th March Later

Dear John

It’s been a very exciting trading week for me and the week I took off has really helped me with a lot of issues. I appreciate your call yesterday butI never traded yesterday as I spent the day and most of the night thinking about what you said.

Trading affects people in different ways and each one has to find his groove. I know you disagree with the ‘comfort zone’ but I am not someone who can take pressure and I need to keep my wits about me when trading and added pressure will kill my trading as it so nearly did two months ago.

Having traded now for half a year this is what I have come to realise. Demo trading is fine to learn how to trade but it doesn’t teach you anything about money management and the psychology of trading. Only when you start with real money does reality sink in. I also find that to start trading with larger sums right away can break you before you are comfortable trading. So my thoughts are to get started and learn the basics, then open a small account (maybe a micro account) and trade small amounts so that you are happy to enter and exit trades even if they go against you. Only once you are making consistent profits albeit small ones as your stake is smaller should you consider increasing your lot size.

To me trading will eventuallybe my bread and butter and I have found a system that I’ve mentioned in previous emails. Because I previously traded higher lots I was terrified to enter trades in case I got zapped. Reducing my lot size I can absorb losses and am not afraid to enter more than one trade a day. In the past I made a few pips and got out afraid I’d give it all back, now I am happily making40+ pips a day and feel I’ve achieved something.

I’m getting to the point where I will be happy to increase my lot size. I’m not there yet but I’m close. I discussed our conversation with my son and he agrees with you that if you are under pressure you will be more focussed. To me it’s the opposite. I need to be relaxed entering a trade because fear clouds your judgement and I enter too late missing a good opportunity because I need double confirmation I’m doing the right thing and by doing so cock up my entry.

Every time Iincrease my lot size I lose money and I’ve halved my account by trading beyond what I feel is the right amount for me till I feel more confident even taking money management into account. To me that confirms that I wasn’t ready to trade bigger lots. Building up my account again has been a hard slog and it’s taking longer because I decreased my lot size but my thinking is if you can consistently trade smaller amounts for longer periods by the time you have recovered your losses you will know more, feel more confident with your system and then are ready to trade higher lots.

I can see you reading this and shaking your head. It’s all about being consistent and a week or two of consistency is not enough. I intend to be in this for the long haul. Wiping out my account trying to get there won’t make me a better trader. I’ve spoken to other traders who started trading and beginners luck made one profitable trade after another. One trader did so well he doubled his account within a few weeks and got confident and as quickly lost what he’d made and half of his original account. His mistake cost him $30 000 and he’s gone back to square one and trades £1 a pip and has to work up to what he lost.

I don’t intend going down that road. Despite his small lot size he makes his living trading and when the trade looks good adds a few more lots to it. If I look back over the past few months I can honestly say that only now do I feel I’m becoming a good trader and I understand the trades I enter.Before it was often hit and miss with too little knowledge of what was going on. The indicators cluttered my charts and I didn’t understand what they were telling me. Had I started demo’ing a system from the beginning I’m sure I’d be a lot further today however that is hindsight and I think there are very few traders out there who begin consistently and remain so till they find their trading feet.

On the plus side I’m making good pips. My losses are smaller and when Ienter my trades when the signals don’t fully line up I get bitten. Thankfully the bites are getting less and the wins are overtaking them. Outof 10 trades 7 were winners. I entered a trade on a longer time frame too late and instead of bagging my 30+ pip profit I gave the trade lots of room to move wanting to stay in for longer and it went against me and I lost 30 pips. I closed the trade as I didn’t want to risk more. Of course the trade did eventually continue to make over 200 pips. Its areas like this that Ineed to become more familiar with. Analysing the trade I saw it had reached major support and that would have been a good place to lock in profit as it retraced all way back again. I made those pips back again in subsequent trades. Its ok to stay in a trade for a longer period but I need to lock inprofits. Getting there …..

I look back to when I started and can see the progress. In 3 month’s time I’ll do the same again and see further progress. Most important of all I am extremely grateful for your help and support and pushing to do better. Have a good weekend Regards- Desiree