Staying in the game is the most critical aspect of forex trading, which means that you do not liquidate your account. Whichever trading method you use, you will not make a profit if you continue to blow up your hard-earned profit on a few losses. So many traders boast a high return, but almost all of them will be followed by a similar amount of losses that will lead them to a break even or even total loss.
Even the best forex trader in the world can make up to 30% average return per year and yet you are deceived into believing that you can do better than that. Many successful trades are offset by losses caused by potential profits that went wrong. If only one is known in advance about which trades are profitable, the losing trades can be avoided. In reality, however, this is impossible, and therefore we must assume that all trades are profitable and hope that the winnings offset the losses.
A common mindset of new traders is that risk is more acceptable, while profit must be blocked as quickly as possible. This can be seen in many forums that emphasize the use of trailing stops of just ten pips. If you have traded long enough, you will realize that even 60 to 100 pips can be considered market sounds or noises and that they are virtually unpredictable. So all small persistent stops can be hit.
Given the small capital that most new traders have, they have no choice but to make such ridiculously small stops. When a trader has a small profit, the greed, and the fear that even before the goal is reached, the trade ends with a small profit. It may seem like a safe option, but in the long run, it is the system that matters. What guarantees for success is a system that is followed religiously.
Emotion and greed have no settings or parameters to play, and they are quite subjective. So how can you determine which 'settings' of greed and fear work best? This is where a system comes into play. A good system takes away the emotion and greed. A good system has parameters and settings that can be tuned differently than emotions and greed. And when the best settings are found, the system can be used with great success; it will undoubtedly never be perfect.
In the real world, the successful and wealthy traders earned their wealth slowly and steadily through careful risk management and very sensible use of leverage. As a small trader, however, low leverage can be too slow. There are ways to make a profit like a hedge fund managers who use high levers, but these methods are usually masked by the false promises of so-called forex gurus and brokers who entice beginners with ridiculously high-profit potentials.
Any method you use will not work if these trading management methods are not employed. After searching numerous sites and forums, I have never seen traders who use these ideas for trade management. Now, this sheds light on the saying that 90% of traders often fail!