Why Proper Position Sizing is THE Most Important Forex Trading Skill Posted

It is a key element in risk management, which can determine whether you live to trade another day or not. It can keep you from risking too much on a trade and blowing up your account. Sure, when you bet big, you can win big. But what happens when you lose? Well, you don’t need to be a rocket scientist to figure that one out – you lose big, too. Without knowing how to size your forex positions properly, you may end up taking trades that are far too large for you. In such cases, you become highly vulnerable when the market moves even just a few pips against you. When calculating your position size, you should determine and acknowledge your risk profile. If you catch yourself about to bet big on a certain trade, ask yourself why you are about to do so. Nobody does something just for the heck of it. Binge eaters don’t just overeat just so they could eat a lot. In one way or another, they get something out of it. Some sort of self-fulfillment perhaps. forex greedThe same is true for a trader who always finds himself betting too much on his forex setups even when past experience tells him it’s not a good idea. Why does he keep on doing it? A little introspection can make one realize that it’s more than just about being greedy. For most traders, they realize that their aggressive behavior is tied to their self-worth. They bet big in hopes that they win big. The prospect of massive gains consequently makes them feel good about themselves. The problem though is that they don’t fully understand how much they could lose and they find themselves being unable to control their emotions when price goes against their way, even by just a few pips. In order to address it, one has to acknowledge that there is indeed a problem and that will make a trader realize that this mindset is flawed. With time and conscious effort, he will eventually realize that his trading positions don’t measure his worth as a trader