Document Text Contents
Page 1
Presented bywww.gregsecker.com.au
FINANCIAL FREEDOM
THROUGH FOREX
By Greg Secker
and Chris Weaver
Page 2
FINANCIAL FREEDOM
THROUGH
FOREX
How to Harness the World’s Money Mountain
and Set Yourself Financially Free
Greg Secker
&
Chris Weaver
Knowledge to Action Publishing
Page 67
Greg Secker & Chris Weaver
59
Question: If you were to lose 80% of your account, what percentage
increase would you need to achieve to bring you back to even?
Answer: 400%
Check it out below!
Initial trading investment $100,000 – 50% in losses = new balance of
$50,000. To increase your new account balance back to your original
balance you must double it (a 100% increase!).
This is not meant to scare you away from trading; this is meant to direct
you into professional account management.
As stated above the purpose of this chapter is to create a sound, secure
approach to risk managing your account. The information contained in this
chapter so far has shown you why risk management is essential: real money
is at stake and can be lost quickly.
1% Maximum Account Risk per Trade
The key to exercising proper risk management consistently is to use an
objective method of determining risk. To do this, you must know the
Golden Rule: 1% Max Risk per Trade.
You should never risk more than 1% of your trading account on any
single trade! If you are trading with a $100,000 account, your maximum
risk on the trade is $1,000 ($100,000 x 1%).
Why 1%?
Question: If you are risking 1% of your account balance per trade, how
many consecutive trades must you lose to completely wipe out your
account?
Before you answer, have a look at this example:
Let’s say that you are trading with a $100,000 account and you lose on
ten consecutive trades (if you finish this book, this is very unlikely to
happen to you). With a 1% account risk you may expect your account to
be down 10%, but let’s look at the true result:
Page 68
Financial Freedom through FOREX
60
Trade 1: $100,000 – 1% = $99,000
Trade 2: $99,000 – 1% = $98,010
Trade 3: $98,010 – 1% = $97,029.90
Trade 4: $97,029.90 – 1% = $96,059.60
Trade 5: $96,059.60 – 1% = $95,099.01
Trade 6: $95,099.01 – 1% = $94,148.01
Trade7: $94,148.01 – 1% = $93,206.53
Trade 8: $93,206.53 – 1% = $92,274.47
Trade 9: $92,274.47 – 1% = $91,351.72
Trade 10: $91,351.72 – 1% = $90,438.21
Now before you give your answer to the question above, consider the
trend over the ten losing trades with the 1% risk.
Answer: It never happens!
Exactly right! With a 1% risk, it is physically impossible to lose all of the
money in your trading account. This is wonderful because we
understand that we must have money to trade, and here we are making
sure that we can never lose all of our money. It is also one of the
reasons why it is so important to manage your account, wins and
losses, in terms of percentages instead of just figures. For instance, I
often see amateur traders managing their risk basis on nothing more
than a particular amount of money, such as $2,500 per trade. The
problem with this style of risk management comes when the account is
trading at around $25,000. It is utter madness to risk 10% of the total
account balance on a single FX trade, especially when there is certainly
no guarantee of success. It is mandatory that we create a system in
which every time there is a loss the amount of money that is at risk on
the following trade diminishes in line with the account balance. This is
the basis of our risk management setup. As the account decreases, the
risk decreases (remember, Capital Preservation → Income Generation,
and large amounts of money are only made when small amounts of
money are risked). Conversely, as the account increases, the
opportunity and ability to generate profit increase with every single
trade—it is literally the best of both worlds, and it puts you in the best
possible position for trading success!
Page 134
Financial Freedom through FOREX
132
Success is a habit—It’s not what you do once in a
while; it’s everyday
If I spent a day with you, I would be able to tell how successful you
would end up. People often find this a somewhat pompous statement,
but I don’t mean it to be that. I say it because it’s true. The point here is
that the secret to your success lies in your daily schedule: what you do
consistently, you become.
If you want to change your life, change your daily schedule. It’s pretty
obvious that good decisions create a better destiny, yet many people don’t
appear to link up their apparent lack of success to poor decision making.
Some people make choices and go on to experience poor results—yet
these people wonder why they can’t seem to get ahead in life. They never
connect the dots. Other people, such as smokers, are aware that their
choices may not be good for them, but they carry on regardless—there
may, after all, be some secondary gain associated with the smoking, such
as the smoker getting a break from the office or getting the chance to
connect and have some rapport with other smokers.
The point is, nobody says that good decisions are always simple, but
they are necessary for success.
You start to win the game of life by making better decisions. One of
those would be to take action now, immediately after reading this book.
As you embark upon this exciting journey as a trader, there are also
some important things you need to decide to be, in order to have. The
well-used phrase, “Be–Do–Have,” springs to mind here. We must be a
certain person, in order to do or act in a certain way, to allow us to have
the things that we want.
To help with this, here is my behavioural checklist, that whilst you may
not ‘instantly’ become, should be your heading - daily.
Attitude: Develop the right attitude and exhibit it daily.
Be responsible: Stop blaming everyone and own your results. Only
through this strategy do you give yourself the power to change the
results.
Page 135
Greg Secker & Chris Weaver
133
Prioritize: Do the important stuff first; read e-mails at the end of the
day.
Commitment: Keep your promises; commit to making yourself a
success every day.
Faith: Deepen your faith and practice it daily.
Presented bywww.gregsecker.com.au
FINANCIAL FREEDOM
THROUGH FOREX
By Greg Secker
and Chris Weaver
Page 2
FINANCIAL FREEDOM
THROUGH
FOREX
How to Harness the World’s Money Mountain
and Set Yourself Financially Free
Greg Secker
&
Chris Weaver
Knowledge to Action Publishing
Page 67
Greg Secker & Chris Weaver
59
Question: If you were to lose 80% of your account, what percentage
increase would you need to achieve to bring you back to even?
Answer: 400%
Check it out below!
Initial trading investment $100,000 – 50% in losses = new balance of
$50,000. To increase your new account balance back to your original
balance you must double it (a 100% increase!).
This is not meant to scare you away from trading; this is meant to direct
you into professional account management.
As stated above the purpose of this chapter is to create a sound, secure
approach to risk managing your account. The information contained in this
chapter so far has shown you why risk management is essential: real money
is at stake and can be lost quickly.
1% Maximum Account Risk per Trade
The key to exercising proper risk management consistently is to use an
objective method of determining risk. To do this, you must know the
Golden Rule: 1% Max Risk per Trade.
You should never risk more than 1% of your trading account on any
single trade! If you are trading with a $100,000 account, your maximum
risk on the trade is $1,000 ($100,000 x 1%).
Why 1%?
Question: If you are risking 1% of your account balance per trade, how
many consecutive trades must you lose to completely wipe out your
account?
Before you answer, have a look at this example:
Let’s say that you are trading with a $100,000 account and you lose on
ten consecutive trades (if you finish this book, this is very unlikely to
happen to you). With a 1% account risk you may expect your account to
be down 10%, but let’s look at the true result:
Page 68
Financial Freedom through FOREX
60
Trade 1: $100,000 – 1% = $99,000
Trade 2: $99,000 – 1% = $98,010
Trade 3: $98,010 – 1% = $97,029.90
Trade 4: $97,029.90 – 1% = $96,059.60
Trade 5: $96,059.60 – 1% = $95,099.01
Trade 6: $95,099.01 – 1% = $94,148.01
Trade7: $94,148.01 – 1% = $93,206.53
Trade 8: $93,206.53 – 1% = $92,274.47
Trade 9: $92,274.47 – 1% = $91,351.72
Trade 10: $91,351.72 – 1% = $90,438.21
Now before you give your answer to the question above, consider the
trend over the ten losing trades with the 1% risk.
Answer: It never happens!
Exactly right! With a 1% risk, it is physically impossible to lose all of the
money in your trading account. This is wonderful because we
understand that we must have money to trade, and here we are making
sure that we can never lose all of our money. It is also one of the
reasons why it is so important to manage your account, wins and
losses, in terms of percentages instead of just figures. For instance, I
often see amateur traders managing their risk basis on nothing more
than a particular amount of money, such as $2,500 per trade. The
problem with this style of risk management comes when the account is
trading at around $25,000. It is utter madness to risk 10% of the total
account balance on a single FX trade, especially when there is certainly
no guarantee of success. It is mandatory that we create a system in
which every time there is a loss the amount of money that is at risk on
the following trade diminishes in line with the account balance. This is
the basis of our risk management setup. As the account decreases, the
risk decreases (remember, Capital Preservation → Income Generation,
and large amounts of money are only made when small amounts of
money are risked). Conversely, as the account increases, the
opportunity and ability to generate profit increase with every single
trade—it is literally the best of both worlds, and it puts you in the best
possible position for trading success!
Page 134
Financial Freedom through FOREX
132
Success is a habit—It’s not what you do once in a
while; it’s everyday
If I spent a day with you, I would be able to tell how successful you
would end up. People often find this a somewhat pompous statement,
but I don’t mean it to be that. I say it because it’s true. The point here is
that the secret to your success lies in your daily schedule: what you do
consistently, you become.
If you want to change your life, change your daily schedule. It’s pretty
obvious that good decisions create a better destiny, yet many people don’t
appear to link up their apparent lack of success to poor decision making.
Some people make choices and go on to experience poor results—yet
these people wonder why they can’t seem to get ahead in life. They never
connect the dots. Other people, such as smokers, are aware that their
choices may not be good for them, but they carry on regardless—there
may, after all, be some secondary gain associated with the smoking, such
as the smoker getting a break from the office or getting the chance to
connect and have some rapport with other smokers.
The point is, nobody says that good decisions are always simple, but
they are necessary for success.
You start to win the game of life by making better decisions. One of
those would be to take action now, immediately after reading this book.
As you embark upon this exciting journey as a trader, there are also
some important things you need to decide to be, in order to have. The
well-used phrase, “Be–Do–Have,” springs to mind here. We must be a
certain person, in order to do or act in a certain way, to allow us to have
the things that we want.
To help with this, here is my behavioural checklist, that whilst you may
not ‘instantly’ become, should be your heading - daily.
Attitude: Develop the right attitude and exhibit it daily.
Be responsible: Stop blaming everyone and own your results. Only
through this strategy do you give yourself the power to change the
results.
Page 135
Greg Secker & Chris Weaver
133
Prioritize: Do the important stuff first; read e-mails at the end of the
day.
Commitment: Keep your promises; commit to making yourself a
success every day.
Faith: Deepen your faith and practice it daily.
