WOW! What a week. EURCHF 1.2000 floor gets removed by the Swiss National Bank unexpectedly and absolute mayhem ensues – Whipsaw moves across chf pairs in the thousands of pips, big brokers becoming insolvent, brokers being bailed out, price freezes and heavy trading losses. A really big wake up call for all of us, including myself. A horrible week but if we can take one positive is that it can reinforce just how important/essential risk management is.
In this week’s video I review Wednesday’s dramatic event in regards to what happened and more importantly WHY it happened. Then I delve into the 5 key risk management principles that have safely guided me over the past 7 years and kept my capital in tact at all times. Risk management for a trader doesn’t just include our trades, in covers several aspects which I detail in the video.
Long term success will not just come from how much money you make during the profitable months, but how well you protect your profits during the more challenging months and especially during these freak, unpredictable events seen last week. I lost count the amount of times I gave back profits in the first few months of my trading career. It was only when I improved my capital preservation/risk management techniques that I was able to grow my account slowly and steadily over time. Get this element of your trading right, and you will see some astonishing growth over the next 10+ years. Don’t let these rare events that happened last week blow up all your hard work.
So now the storm has settled, there are some big events happening next week so prepare yourself accordingly, risk manage solidly and then safely take advantage of the opportunities as and when they arise.
Until we speak next