In this article I would like to try to explain why it is so important to only trade money that you can afford to lose in order to be successful. I’ve seen people lose their rent money far too many times for my liking, and you shouldn’t trade when you’re desperate to win. You can find a much more detailed article on money management on forextrading.pm, which is a trading portal. This article is meant to give you a quick insight!
Have you ever been in a casino? If you have, I’m sure you have noticed that the rich people, the ones that can afford to lose as much as they bet, are the ones that usually walk out winners from the casino. Of course, I’m not saying that they win all the time (they certainly don’t) but it’s not that uncommon for them to do so. On the other hand, you’ll see people in there who look really desperate, as if their lives depended on whether they’d win or not. These are usually the people that end up losing everything. So why is this? Is it just some universal injustice that makes poor people lose and rich people win? I think the reason that it happens is because the rich guy can take it or leave. It doesn’t matter too much to him whether he wins or lose. He might win some money, cash out and go home. The one playing for his rent money however, can’t relax the same way.
This becomes even more intensified when we’re talking about forex trading. In casino games, there’s no way of predicting, or affecting the outcome of you game. The very thing that defines a casino games is that it’s purely based on chance. I forex trading, however, we have an excellent chance of predicting the future, as the tools provided gives us the ability to closely analyze the situation. Do you see how this would set an enormous amount of pressure on the guy that can’t afford to lose?
Obviously, the trader who can’t afford to lose is not going to dare taking the same kinds of risk as the rich guy could easily do without worrying. This could cause him to lose his money, which is something that can’t happen. So, instead of taking a risk, the trader then chooses to only invest on extremely low risk investments, which brings extremely low returns. The rich guy on the other hand can place a number of semi safe investments, and he might end up losing a few, but making a huge profit off the other ones, and thus his capital grows much faster. If you’re a spanish trader, you can find much more on this subject by clicking here!