
It is easy to do – to let a single trade turn into an investment. You see it as a trade that can’t fail, high convictions escalate into something even more and risk is no longer seen as relevant. A slippery slope. All hopes come to rest on this one single trade. “It is the trade of the century”, you convince yourself. Such an easy trap.
You may have been fortunate and acted in exactly this way, and got away with it. But in truth, you got away with it this time. Best not repeated. It’s a classic tale of woe waiting ahead if you go down that path. Trade for the long run instead.
It is just human nature and an easy trap to fall into. One of the last times this happened was around the SNB when they pegged the EURCHF pair at 1.2000. The central bank was long EURCHF and so traders thought they were trading with an invincible partner. If the SNB couldn’t pin the EURCHF pair to 1.2000 then no one could.
This was the trade of the century – until it wasn’t. See the chart below.
So, never let a trade turn into an investment. Just obey this principle. If you have ignored this advice and got fortunate, just don’t ever repeat it.