Learn professional closing methods from Iidacchi-sensei: settlement theory for surviving in the foreign exchange market｜Episode 2 Scenarios when things go differently from expectations
Profile of Dr. Eidaッチ
Former instructor at a preparatory school. Loves hot springs and holds a Hot Springs Sommelier qualification; a professional FX trader. By using the method called “Closing Price Trading Method,” he has trained many capable traders, and at his online study sessions participants from all over Japan, from the elderly to the young, learn together. The chart analysis method that emphasizes the “closing price” is popular among part-time traders as a trading approach that does not require concentrating on 24-hour markets.
Blog:The Big Comeback from 100,000 Yen! FX Trader Iaidaッチ BLOG
*This article is a reprint/edit of an article from FX攻略.com July 2019 issue. Please note that the market information written herein may differ from the current market.
Your own funds are your own convenience
Hello, this is Dr. Eidaッチ. I have been explaining the theory of settlement since the last time. I wrote that settlement isn’t a choice between taking profit or stopping loss, but rather involves diversity, and that using your own funds as the criterion for stop-loss is not important to the market.
The mistaken idea that “stop-loss is 5% of own funds” has spread, causing many people to think of settlements only as either taking profit or stopping loss, resulting in poor settlement planning. Also, using your own funds as a stop-loss criterion is your own convenience and has nothing to do with the market. For the most important trading decision—closing a trade—imposing your own convenience is a big mistake.
Doubt the Stop-Loss Mentality!
Stop-loss remains important now as it always was, but settling large unrealized losses and realizing them imposes a heavy psychological burden. This is where some people can realize losses and others cannot; unfortunately, more people fall into the latter category.
Unrealized losses grow faster than you can bear, so waiting until they balloon is too late. Trying hard at something you can’t do only makes the difficulty continue. Like modern sports, relying on sheer will or mental toughness is outdated and nonsensical.
