Forex Trading - What Is Scared Money?
May 25th, 2007 by moniesYou hear it again and again from trading “guru’s”. Don’t trade with scared money. Don’t trade with money you can’t afford to lose.
That’s good advice, but incomplete. Obviously, you don’t trade with the rent money, or with your food money. That’s common sense.
What’s missing a full definition of scared money. Scared money is any money that would bother you to lose. If you’d feel even the slightest twinge at losing it, it’s scared money.
That means that a lot of people who are trading, shouldn’t be. It’s weird and backward, but the only way you can really succeed at trading is when you don’t care if you lose or not.
Only then can you follow your rules without passion after four loses in a row. You don’t care that you just lost four in a row. It’s no big deal to you. So you continue exactly with the system. It’s money you can afford to lose. So what?
That’s the attitude that you need to have towards your trading capital. Of course, you want to make money! That is the point of trading, but the truth of the matter is you can’t until you don’t care.
That begs the question, how does one stop caring? What do you do to make your money “un-scared”? Trade with less money. Keep reducing it, until you don’t care.
Most likely, when you finally reach that amount, it’s going to be very small. Too small. Now what?
Author: Nathan Pennington
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