5 key elements without which even the best analysis won't save you from losses
1. Trading psychology (50% of success)
- FOMO (fear of missing out) → Causes buying at peaks.
Fear and greed → Lead to early profit taking or averaging down losses.
How to fight it?
- Trade by plan, not by emotions.
- Rule 1%— don't risk more than 1% of your deposit on a trade.
2. Market makers and liquidity
Where are the stop losses? Market makers see clusters of orders and 'take them out' before the move.
Traps:
- Fake breakouts of levels (especially before news).
- Sharp spikes in low-liquidity assets.
- How to protect yourself?
- Monitor the order book depth (Level 2).
- Don't trade low-activity assets without stop-losses.
3. Risk management (the main skill)
- Formula: Position size = (Deposit × Risk per trade) / Stop-loss
- Example: Deposit $1000, risk 1%, stop-loss 5% → Position = ($1000 × 0.01) / 0.05 = $200.
Important:
- Never average down a loss without a clear plan.
- Diversify, but don’t spread yourself too thin.
4. Macro and news
- Key events:
- Fed decisions (rates, QT/QE).
- Oil quotes, wars, sanctions.
- How to use it?
- Calendars: ForexFactory, Investing.com.
- Before news— reduce positions or wait for trend confirmation.