New traders focus on the money amount they get in case of successful trades and the amount they lose on the unsuccessful ones. Although this is understandable at the beginning, it’s particularly harmful to your mind.
The pain threshold of the amount of money you win or lose depends of course on yourself. A thousand dollar loss may be little for someone and very big for someone else. Watching numbers is quite impactful. This leads us to a little trading tip on how to lessen this psychological pressure.
Focus on the percentages. Let’s say you have a 100K account and you risk 1% of your account on a trade. The more you build that account the more that 1% increases. If you watch the nominal amount of money increasing, you may feel inclined to reduce your risk the more your account goes up.
This action not only hinders your progress, but can also cause pain when you experience losses. On the other hand, if you only look at the percentages, they will always look the same and diminish that pressure you may have focusing on the nominal amounts.
This article was written by Giuseppe Dellamotta.