RULE #1 –
Use money you can afford to lose.
- If you are trading with funds you need for some family project, you are doomed to failure. This is because you won’t be able to enjoy the mental freedom to make sound trading decisions.
- Your trading funds should be viewed as money you are willing to lose. Your position should be carefully analyzed so you don’t jeopardize other funds or assets.
- One of the keys to successful trading is mental independence.
- You’ve got to trade outside influencing factors, and that means your trading freedom must not be influenced by the fear of losing money you really have earmarked for a specific need.