After we have opened up the account, we are so excited to trade and dream to become a millionaire soon. We think that is simple and easy because the market will move in either side way, up or down. If it is side way,probably we not losing anything except broker charges, spread. If it is the same way we trade or I should should bet, we can get 2 else we will lose 1. We trade with micro lot on 5 minutes chart. we think can become an millionaire.
Two (take profit) TP vs one (Stop Loss) SL ratio is an idea that we read on internet. The market is like a coin, if we flip it, it will be face up or face down. If we bet the right side, we will get 2, if not, we will lose 1. By mathematics, the possibility for face up is 50% and 50% for face down. Logically 100 times flipping the coin, we will get 50% correct, every time we are right, we will get 2, total 100. for the other 50% which we are wrong, we will give back 1 which is 50 in total. So, we still earning 50. In fact, if is won 34 times out off 100 times flipping the coin, I still can earn 2%. It is not trading, it is gambling.
For the first 2 weeks, we are earning about 30% of the money we deposit in the account. Just imagine, if we can consistently doing that; in less that 4 weeks, we can double up our account value or even more. We are so happy and almost can't sleep on that week. Besides, I seem no interest to stay in the office and just thinking to get back home and sit in front of the monitor. I spend average 5-6 hours monitoring the chart. That's tiring and suffer mentally. For new traders, please take this as your lesson. Don't become another me. the money your earn may not worth for you to suffer yourself like that.
Now, greedy is taking control of our (myself and Mr. K) emotion. Instead of trading 1 lot, now I increase it to 3 lot per order and not only trade one pair but 2 - 3 pairs at the same time. Because, I want to grow the money faster. While Mr. K, deposit in another USD 1K to his account and he want to trade 10 lot. All the lot I mentioned is micro lot; for example, 10 micro lot of EUR/USD is USD 1 per pip.
I think you know what's going to happen to us, the lost all the money and margin called. I lost USD 245 while Mr. K lost USD 1245 including the money we earn in previous week. Mr. K lost all his money faster than me because he keep double up the lot size when he lose 1 order; means increase for 10 lots to 20 lots and 40 lots. Within few days, our account left only USD 5. This is a pain which we never forget. USD 1,000 is equal to MYR 3,500, three years back. MYR 3,500 is equal to an Senior Engineer salary a month in Malaysia. I and Mr. K totally feel blank on that time. We sit together again and search for new strategy.
