Discover Your Next Trading Step w/ this Test >>

Listen to “200% Performance” on Spreaker.

Hi Guys. Hi from Andrea Unger.

I had a conversation on facebook messenger with a friend of mine and he wanted to tell me about his experience. With a trade that allowed him to perform at 200 percent gain in one day. So I was a bit astonished, 200 percent in one day. So I asked him about his plan. How did you plan this trade? And he explained that he saw a bullish scenario on Euro-US dollar.

So he entered the position and once the gain exceeded 200 percent, he was using some trailing stops just to capture that 200 percent in case of retracement. So very well done. But I asked him, OK, nice. But, what was your plan in case the Euro Us dollar moved against you, what happened? And he had the plan as well.

So he was fine, here. And he explained that “oh yes, fine, in case Euro Us dollar would have gone in the opposite direction, I would have closed the trade with a loss of 95 percent. That’s obvious. So I said, OK, that’s clear now. 95 percent risk on a trade is obviously no longer trading. I explained to him that it would be betting or some binary option stuff.

Where in this case here, he had a better risk-reward ratio rather than what you get on binary options, by most of the brokers, but in any case, he had this 95 percent risk of loss. So it was a pure bet, no longer a trade, I often recommend or suggest that a two percent risk per trade is already moderately aggressive.

So imagine 95, 95 means to wipe out the account. Your worst-case scenario is to lose all your money and obviously, this would not allow you to trade any further. So it’s fine. I’m happy for the gain of my friend, but I also told him not to go on this way because sooner or later he would be hit and close his career as a gambler (?) or a trader. I don’t know how to call him.

So guys, when you listen to performances of x percent in a day, 200 percent, always look at what risk was behind it. And then you can judge if the bet was a bet, which is fine if you are aware of it, or if it was a trade. 95 percent risk on a trade, is no longer trading. It’s betting, gambling, it’s no longer trading.

So be aware of it, risk small and stay tuned.

Discover Your Next Trading Step w/ this Test >>

What do you think about this post? Don’t forget to share your thoughts in the comments below!

And if you think the content is valuable, feel free to share it with your friends! 🙂

Known as the only 4-Time Trading World Champion (2008, 2009, 2010, and 2012), Andrea Unger is a full-time professional trader since 2001 and honorary member of SIAT (Italian Society of Technical Analysis, a branch of IFTA). Appreciated author, he is often invited as a speaker all around the world.