All good methodologies use stops. A protective stop loss is an order to exit a long or short position when prices move against you to specified price.

The stop loss insures against a usually large loss and has to be used in one way or another.

An initial stop loss can be placed with your order on the trading platform; the trade will be closed, automatically when if the stop loss is hit.

This type of stop loss will allow you to execute your trade and go spend time with your family or friends, this will help you to trade out of your emotion, because you know how much money you will lose if the market didn’t go in your direction.

Lot of traders use mental stops, when they enter a trade, they don’t place a stop loss, because they think that the broker will hit their stop loss which is not true.

The reason behind using mental stop is the human psychology, humans hate to lose money. And if you don’t accept losing money as a part of the game, you will never make money in the market.

Don’t never think of using mental stops, because you can’t control the market, you can’t be sure that the market will do this or that.

Before you enter a trade, calculate how much you may win, and how much you may lose. Place your stop loss order. And your profit target. And forget about your trade.

Don’t ever risk money that you can’t afford to lose

I got lot of questions from traders asking me about how much money they need to start trading. First of all, you have to take trading as a business. You can make money in this business and you can lose it as well.

The amount of money that you need to start trading depends on the amount of money that you can afford to lose. Don’t ever borrow money or risk big amounts of money that you can’t afford to lose.

Because trading is all about emotions, if you trade and you are afraid to lose your trading account, you will fail in this business. Because you will be controlled by your emotion, and this will affect your trading decisions.

You will not be able to follow your trading strategy, and you will certainly fail.

The best thing to do is to start small, try to get as much experience as you can, and build slowly your trading account. This is how successful traders become successful.

Your success as a trader has nothing to do with your educational background; you can be a doctor, a lawyer, or a physician scientist.

If you don’t follow the rules, you will end up blowing up your entire trading account.

Trading is like learning a new skill, you must be ready to put in time and effort, let me give you an example, if you want to get a degree from a university, and you have to spend at least 3 years.

You wake up every morning, you study hard, you follow up with your classes, and if you are enough serious and disciplined, you get your degree.

The same thing when it comes to trading, if you are enough disciplined and you put in time and effort to learn, you will acquire a skill to feed yourself and your family for the rest of your life, you will get your financial freedom. So, you will never think of a day job.

Some traders spend more than 10 years to find a winning strategy and become profitable, others spend 20 years without results.

Give yourself some time and spend as much as can you to learn, because this is the only way to succeed in this business.

Over time you will develop these trading strategies, because you will determine what works for you, and what it doesn’t work. Keep practicing, and learning from your mistakes, don’t think in term of making money as fast as possible, think in term of becoming an expert of what you do, and then money will follow you wherever you are.