As I told to you many times and as you probably already know, there is 99% of retail traders who are loosing their money. You can also find many videos on youtube telling the truth about the reason why just only 1 trader from 100 is able to make some profits or just not lose any money. I think I also saw a statistic from the brokers about the time perspective how long it takes to drop down the account to margin call and it was horrible.
For a normal retail trader the interval of losing money is 3 months, respectively 90 days. So let’s say when you survive more than 90 days with your live account you are one of the best retail traders in the world. But this tooks me to the question. What is really the reason for such a disaster in retail trading?
I realized that the problem is really simple. Lets imagine you will trade in maminum leverage 1:30 and you will make a loss of 10% on one trade. Doesn’t matter if you move the SL or if you trade without it. Just as an example -10% of the account. After such a loss your leverage will probably limit the lot size for next trade. So if you made -10% with 1,0 lot than the leverage restriction will decrease the maximum lotsize for next trade from 1,0 to 0,8 for example and now you will need more pips to make for the same amount of money. This of course leads imidiately to moving SL for another trade only to get the chance to make the amount of pips needed to cover the losses. As you already knows, well 99% of retail traders knows, this trading leads only to another loss and another one so at the end of the day you are trading full leverage without SL hoping that next trade on M5 chart will bring you 200 pips and all will be fine.
But there is another retail problem and that’s greed. If you are really lucky guy and you hit the target of hindrets of pips because of news or whatever else, you cover losses and you make some profit than the freed step in the game and you will want to get more, much more. So you will not decrease the risk, you will still trade full leverage and as usual you will make some losses. These will make you draw down not -10% but even worse. So after reaching -20%, your leverage restrict the lotsize from 1,0 to 0,6 and you will need even more hundrets of pips to cover losses and that will open the mouth of the broker even more so at the end you will be lost finally with Margin Call and that’s game over.
And this my friends is the reason why 99% of retail traders lose money. You can trade whatever you want, doesn’t mater which technique, which trading system, which timeframe or which market. The only one thing you need to do is do not lose more than 1% of your account on any trade you make. it should be even more if you want to be specific, but 1% is really nice start point.
After such a reveal i decided to prepare a extra account for me. So all my trades will be copied from my master account to my Live trading Slave account. Every single trade will be copied with defined lotsize, defined SL and PT. On this Live account there will be EA for reducing the loss on single trade and also the EOD – End of the Day P/L. So there will be no way how to lose more than 1% on single trade. If I open 10 lots on Master account, the software will copy the trade to Slave account with 1,2 lot only, for example. Just right lotsize according to account ballance.
I made few modes with stats I already have and as you can see, if we limit the loss on single trade to 1,0% than all equity are rising.
Never ever risk more than 1% again