Forex 1 on 1 Training: DAY 4 - Rob Booker

<strong>Forex</strong> 1 on 1 Training: DAY 4Rob’s Contact InfoEmail: rob@robbooker.comPhone: 304-281-8998Overview for TodayToday is the 2nd of a two-day topic of money management.Another questionnaire.Two spreadsheets.Assignments TodayBelow are a list of to-dos for today.1. There is a short questionnaire below. Please complete the questions and send thedocument back to me.2. Complete the spreadsheet assignments from that section below.Questionnaire 41. How bad did you feel yesterday about not trading for the day?2. What did you learn (if anything) from this week’s experience?Money Management 201Most traders, when they start out, have some type of beginner’s luck. They open a demoaccount and take wild risks, and somehow everything turns out okay. Then they open alive account and get creamed.Most of the time, this is due to the fact that whatever strategy a trader used on a demoaccount is not the same one they use with a live account. But it also has a lot to do withovertrading (a discipline problem).Successful traders all pass through this first test. The ones that make it have simply donea better job at managing their money during this startup phase.So, here are three rules of money management that will help you survive any down-time:Start with less than you can loseYou should be able to afford the complete loss of your first live account. It’s possible thatyou will make bad trades, or trade on emotion, or just have a terrible strategy. It’simportant that you are able to pick yourself up and start over. My first trading account

<strong>Forex</strong> 1 on 1 Training: DAY 4was $2,000. I lost all but about $200 of it within a week. I eventually gained it all back, butit was comforting to know that I had at least another $10,000 to trade if I needed it. Or youshould trade on a demo account for at least 3 months before ever opening a live account.Never bet the farmDon’t ever bet a substantial amount of your trading capital. This usually happens duringa losing streak – traders will have a string of losses and then say, “I’m getting all thatmoney back,” and they trade two or three times the normal size … and you can imaginewhat happens next.Survival is the goalJust like on the TV show, survival is the name of the game. When you enter a trade, don’tthink about how much you stand to gain (trading for 10 pips eliminates this question), butthink about how much you stand to lose. Are you still willing to make the trade?I find that when I ask that second question, I make better trading decisions. I’d rathermake no pips at all than lose even 1 pip. It’s more important to me that I have a littleprofit. That means that I take my time when I trade and make sure that I make tradingdecisions based on sound principles.Goals Progress1. Gain 40 pips in trading Monday through Thursday.2. Ensure that you understand the rationale behind each trade.Assignments for today:1. Get the Day 4 spreadsheet at:www.robbooker.com/books/pips.xlsPlay with the numbers on this spreadsheet. Change the number of trading days in themonth. Change the number of pips you get every day. Change the leverage from 100:1 to50:1.See how people get greedy really fast? They say, hey, I can get 50 pips a day and have $1million by the end of the year. Well, those people usually trade on emotion. And we knowwhat happens to them.2. Get the EV Analysis spreadsheet at:http://www.robbooker.com/ev.xlsThis is the spreadsheet that helps you do the math on an expected value of a trade. I’mgoing to be asking you to do more of this type of analysis soon (and you should start assoon as you can – you should begin considering the variables associated with your trades).