Be Financially Stable

Regardless of how well you protect your account the money in your trading account is called risk capital for a reason. Trading currency off exchange, on margin, is probably the riskiest trading environment in which a trader can participate. Traders can and have lost their entire accounts through stupid trades, poor risk management, or both. It should be obvious to point out that a trader should be financially stable before he begins trading, but I continue to meet traders who are literally down to their last $500 and are trying to trade their way out of a jam. This kind of desperate trading is typically not sustainable, and many of them I meet ultimately fail under the pressure. I suspect a number of traders in this situation are drawn to trading in part due to the low barrier of entry offered by micro accounts and the constant marketing of get-rich-quick trading schemes.

Trading is not a road to easy wealth, and you shouldn't be trading if you are struggling to keep the lights on or food in your house. I'm not suggesting you can't trade if you only have $1,000, but trading is a serious business that requires financial stability going into the venture. If you lose that $1,000, it shouldn't bankrupt you. Stress can lead to poor decision making, and there is already enough pressure to achieve consistency without worrying about having to pay your bills with the next trade. If you are not where you need to be financially, I suggest you seriously demo trade until you are on better financial ground. You'll be much better prepared to trade with live money after a few months of practice and much calmer about taking trades, knowing that your risk capital doesn't represent what's left of your life savings.

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