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A lot of people want to learn what to do to make money in the market and I’ve written a plethora of articles on that topic. From trading strategies to money management, to how to perfect your entry into the market, I’ve written extensively about the various aspects of making money trading.

However, what a lot of people need to know is not just good trading offense, but good defense as well. Good defense is much more important for a trader than good offense. I’ve also written about this topic of defense in trading, but not as much as the ‘offense’ of trading. So, today, due to several emails I’ve received over the years, I thought this might be a good topic to help beginning and seasoned traders alike. Let’s discuss what I do to avoid giving back profits and losing money to the market.

  1. Avoid the chop, avoid the whipsaw

The number one thing you can do to avoid losing large sums of money to the market, something that is 100% within your control, is not manifesting trades out of thin air when there simply is nothing to trade.

The longer you look at your chart to try and make sense of it when there simply is nothing to trade, the higher chance you will lose. A good trade should jump out at you without having to stare at the charts for 30 minutes to see it.

If there’s nothing there, don’t trade. Staring won’t help a trade form. If it’s not there, it’s not there. No signal, no trend, just avoid it.

Also, avoid trading choppy markets because it is these market conditions that often cause traders to manifest trades that aren’t there. Good, obvious trades, form in trending markets and (or) from key chart levels, not in sideways chop.

The market is guided by levels and if the market you’re looking at isn’t clearly demonstrating that it’s respecting levels then it may be best to stand aside for a while. If you’re in a friendly market, this will be obvious, if you’re not in a friendly market things will be quite haphazard and choppy. The market will tell you what it’s doing around key levels; breaking, holding, re-testing etc.

If you want to avoid losing your shirt, pants and the whole farm to the market, re-read this section again and follow the wisdom consistently.

The chart below is an example of sideways and very choppy price action that would be better left alone, rather than lose your money trying to trade it:

  1. Don’t risk more than you can mentally afford to lose

Please don’t brush this off as just another cliché statement on money management: Every single person including myself at times, has risked well above their purse limit. Whether it’s adding to a position, risking too much per trade or just being greedy, if you want to survive in the market, you must start thinking about the money as if it’s real and in your hand. You must determine your set amount per trade, your initial trading capital and until you can prove to yourself that you are successful for a period of time, these parameters and dollar amounts should not change under any circumstance.

If you sat down and said your risk per trade is $100, don’t change that until you’ve had a period of success because there’s just no logical mathematical reason to do so. There’s no point in trading if you don’t aim to make at least a 1:1 risk reward per trade or greater (ie: targets need to be wider than stops). You would be surprised how many people don’t even understand that basic concept.

  1. Day-trading fallacy and over-trading.

Another big reason so many traders lose so much money, is that they give in to the allure and temptation of day-trading. What day-trading is, is over-trading. I have written many articles on the perils of over-trading, but since it’s such a big reason traders unnecessarily lose money in the market, it’s important to discuss it again…

I believe in and teach a low-frequency trading approach. You must let your trades play out without interfering, because trades often take longer than expected to play out. Markets will often go further than we think, and the only way to get on-board big moves in the market (which is what makes you a lot of money), is by being patient and leaving your trades alone.

The only real chance a smaller retail trader has (like you), is patiently waiting for obvious trades to set up and then taking a decent size position that you hold for a period of days or even weeks. Trying to day-trading, dodging in and out of the market multiple times a day, is a fool’s game that will leave you frustrated, angry and broke.

  1. Develop and maintain the proper trading mindset

The proper trading mindset is one of neutrality. You must not become attached to any trade or position you enter. You must TRULY not care if a trade wins or loses. Once you start caring, you start getting emotional and that leads to trading mistakes like over-trading or risking too much.

Money management has the biggest effect on your emotions. What I mean is, managing your risk is the most powerful tool that you can use to make sure you remain neutral. You must determine what your dollar amount is that you can risk and be mentally OK with losing. If you get attached to a loss or win, trading will become an extremely difficult game where you feel like you’re constantly losing. Trading is essentially a game of math, by that I mean, risk reward; making sure your wins are greater than your losses. For the most part, if you apply logical entries, proper mathematics (risk management) and a neutral mindset, you do stand a chance in the competitive sport we call market speculation.

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008.
Checkout Nial’s Professional Forex Course here.

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35 Comments

  1. Praise says:

    Thanks Boss

  2. Sthembiso says:

    Important points indeed.

  3. Mavrick says:

    Thanks Nial, very good points and very well explained.

  4. PERI says:

    Really, an OUTSTANDING ARTICLE for reaching SUCCESS TRADING !
    Regards,

  5. MEHDI says:

    Hi Hail. thanks a lot for this smart and profitable article.never seen yet.
    No Trading Strategies Doesn’t Work If Doesn’t Choose the Right Living Strategy.the right lifestyle.It would be nice to write an article about life style if you have free time.
    thanks again.

  6. nwosu isaac says:

    honestly, with your analysis my trade has improved positively more grease to your elbow nial.fuller

  7. Mangut K. Mafwalal says:

    Nial, you are indeed a good FOREX mentor. Great article that can improve FX trading. Thanks and God bless u more.

  8. adekunle says:

    Honestly speaking…. All this article have influenced my trading
    I almost quit trading but God has placed all this aticules to help me Going. Thank you boss
    I pray God bless me to start the learning course

  9. Erik says:

    Thanks Nial….The mindset info really helped.

    1. Martha says:

      That is very true. I have learned from my mistakes.

  10. Andrew says:

    Great advice. Your articles are really helpful

  11. Abraham says:

    Thanks Nail for your excellency information

  12. PhillipJ says:

    Thank you so much

  13. ANTANAS says:

    Hi thenks for another good article just wery interest hou many traides you take per week or month what is you awaradge i personaly take on but good traid setup per week.

    1. Nial Fuller says:

      I trade around 6 to 10 times per month.

  14. khismusi Sibandze says:

    Blowing your account is not exciting but I have learn my lesson well, keep up with the good articles

  15. Richard says:

    Nial,

    This nugget should be sent everyday for six months, for myself PLEASE send it every hour!!!!!!!!

    As usual your tips and insights are priceless.

    Regards,
    Richard

  16. Leroy says:

    Thanks Nial for another brilliant article- simple but brilliant. I have been following your articles and strategies for quite sometime now and find them instructive and innovative. I have benefited enormously from them and constantly look forward to receiving them. Thanks again and in closing I must commend you on your generousity of spirit, bless you.

  17. OLATUNJI IBRAHIM says:

    nial this is the best article I have read so far in 2017, I had been telling my student to trade the best trade and the best trade won’t come everyday.

  18. David Kelly says:

    Hey, Nial…Great article. When my trading starts to get out of control your advice grounds me. I have a hard time “letting the market come to me”. The best way I have found to do this is to have a two sided decision board with “reasons for” on one side and “reasons against” on the other. I have noticed that the times that the “reasons against” side is empty is when the market coming to me and the more even the two sides are is me forcing a trade. Sounds obvious in the calm of hindsight but in the pressure of a possible signal it tells me much. Your advice has helped me to see that and is a definite factor in my trading. Thank you!

  19. Akhtar says:

    Hi, Dear Niel,
    Extra-ordinary, well-briefed, hammering the beginners to learn properly for gaining some income.Sniper and crocodile have always hedge. Thanks. and best of luck.

  20. Felix says:

    Hi Nial
    Thanks for the article, if there is one thing learning from you have taught me is to be in game for as long as possible by not blowing up my trading account. I have been in for probably a few years though not making too much but definitely not blowing up my trading account. The advice to everyone both beginners and seasoned traders is to find something to keep you distracted from the addiction of wanting to be be in the trade at all times.
    Thanks Nial once again…. You have been a blessing to everyone who comes across you.

  21. Jet Toyco says:

    This article is priceless! Thank you for the great information, trading is a sport and needs dedication and time!

  22. Paul says:

    Hial, always on point. Now am getting courage and confidence that your course good to take. Thank you

  23. Agung Kurniawan says:

    nice articles,
    how many trade per week do you take?

  24. Ivane Zurabishvili says:

    Hi Nial, write same articles often, traders need to it

  25. Said Alwashahi says:

    Thanks Nial
    great advice I like it

  26. Thanh Luyen Le says:

    Thanh you

  27. José says:

    Excellent information. Thank you
    i really appreciated!!!

  28. Lufuno mavhungu says:

    I trade like Nial Fuller

  29. Caramia1 says:

    Yes you are 100% correct – thanks for this. Big lesson to take away from this is to STOP INTERFERING and let things run their course. If you took the trade BELIEVE in it and WAIT! Patience is a virtue as mother always said😊

  30. Thendo says:

    To the point as always

  31. richadi36 says:

    Another nice article, Nial. Thanks a lot for sharing your insights as a professional trader. Issues like money management, proper trading mindset and overtrading are main mistakes that amateurs make at the beginning of their journey…

  32. Essam Eldin Abu Baker says:

    Good as usual. I need help from you please. I wonder if you have any simple trading strategy to use it in the forex market.

  33. KRISTOFA OKENTA says:

    Your articles comes clearer than the morning sun. It is only our trading ‘cloud’
    seems to hide the reasons why we are not succeeding in the market.
    Thanks for your efforts to teach us.

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