FX BOOTCAMPER CREDO
To answer this, we can consult the FX Bootcamper credo:
1. Capital Preservation—survive at all costs.
2. Capital Acquisition—achieve the mission.
3. Capital Appreciation—win the war.
Live to trade another day. The first priority of a conservative trader is to protect his money and not do anything that may draw down his capital.
As a currency trader, you are in the business of buying and selling money. Cash is your product and your service. If you run out of money, you are out of the currency trading business. Protect your money at all costs.
Lock in your minimal acceptable performance (MAP) for each of your trades. MAP is not a goal or a target. It is a minimum requirement for each of your trades. If MAP is not likely, then don’t do the trade.
My personal MAP is 15 pips. To make this achievable, I seek trade setups that are likely to yield 30 to 45 pips. This means that even if my entry is not perfect, I’m still likely to be able to lock in MAP. I do this by moving my stop loss to protect my profit.
With MAP now locked in, it’s time to get aggressive. Get as many pips as you can. This is extremely important. The extra pips above MAP will pay for your losing trades, or for days you didn’t trade at all. Your stop loss is protecting profit, so the worst-case scenario is walking away with only 15 pips.
At the very least, stay in your trade until momentum changes, or you reach a reversal ...