What's a pizza cost? Around $10, right?

Think of 10 pips at $1 per pip on a $1,000 mini account as making a pizza.

What does that feel like? Sort of empty, right? I mean, you're not going to get euphoric grinding it out trading for a pizza? Or, on the other hand, you're not going to get your roids in a flare over a trade that loses the equivalent of a pizza, are you?

There are some serious issues to discuss here, and that's what this post covers.

Of note is that to this post, I have a companion video of the same title: Trading FOREX For A Pizza Is Tough that puts all of this together from a different view point.

If you've come from watching that video, then press on here. However, if this is your starting point, I might suggest that you read through this before watching the video. Or, if you want, you can skip to the bottom of this post to watch that video now.

So, let's change the picture just a little: Same 10 pip/$10 loss of a pizza on the $1,000 mini account, but what's that 10 pip loss cost you on a $100,000 account? It's $1,0000 — considerably more than a pizza....

If you agree to those two statements, then the only conclusion you can come to is that —

Never trade for the money; always trade for the pips and the percentage.

What I mean here is that you can't think of that 10 pip loss on a $1,000 account as 'just' a pizza: It's 1% of the account!

Yeah, but if you're trading a small account where the loss doesn't hurt, then you'll most likely fall into constantly: pushing... your... luck on most of your trades. And we all know what happens when we push our luck, right? Yeah, noting good....

What becomes the real problem is that it's most likely you'll get away with losing pizzas on that smaller account.

However, when the stakes go up, and you're trading a larger account: you're going to freeze at pulling the trigger on that losing trade, it's going to keep going south on you, and you're going to run a huge — and very unnecessary — loss to your account.

But you fully know and understand this! Of, course you do. You're not stupid. But what you may not understand, or have a handle on, is how to keep from taking stupid risks even on an account where the punishment is only a pizza.

What the 1.41% negative expectation means is that if you stand at the table and throw the dice enough times, then over the long run you're going to lose 1.41% of the total amount that you've bet.

So, if you bet $10 each time, and you stand there for say 3 hours, you'll experience around 30 decisions an hour, or a total number of bet events of 90. You'll bet $10, 90 times in 3 hours: $900.

At 1.41% odds, that means that you'll most likely — as in almost certainly — walk away from that table having lost $12.69.

Maybe the $12.69 doesn't mean much to you, but what should really matter is the fact that you're almost destined to lose 1.41% over the long run instead of walking away from the table winning thousands of dollars.

A study released by a major FOREX broker covering 43 Million client transactions showed that 90% of traders lost 90% of their money in 90 days. I refer to this as The 90/90/90 Club, of which, unfortunately, I'm embarrassed to admit that I'm a charter member of.

Those are pretty bad odds....

A lot of that is caused by just dumb-asses looking to drive $500 to $10,000. But a substantial portion of failures are due to folks not interpreting the material they read in books, or watch in videos.

Those statistics are true, but they don't indicate a problem with the FOREX currency market itself, but rather the manner in which folks attempt to trade them.

Legendary speculator Jesse Livermore had this to say:

"The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor."

The base truth is that 90% of the people who go into the FOREX market have absolutely no clue as how to stay safe; it's like having no driving lessons at all and then trying to enter The Indy 500.

But why is that? Are there that many stupid people in the world? No, hardly. The problem is the ease of entry into these markets makes folks want to believe that they could run their $500 stake into thousands of dollars a month.

Why that second requirement? Why limit your account size to $1,000 — basically trading for pizza sized profits?

The only thing I can tell you is that if you don't have the discipline to trade for a pizza, then you don't have the discipline — or the skill — to trade a larger account.

Having the discipline to trade for pizza sized profits will instill in you that you absolutely, positively, without fail must trade based on pips and percentage metrics as opposed to trading for the money.

You do not want to put yourself in a situation where you increase your account size to make more money on a trade. If you do that, then when one goes against you, that $1,000 account size 1%, $10 loss will absolutely lock up your anal sphincter when you have a loss of 1% of your account that's $1,000.

You'll freeze, stay in the account while vigorously rubbing your rosary or prayer beads, praying for divine intervention — which if you've traded at all know that will most likely never happen.

That advice would be to trade for pips, and percentage gain instead of for the pizza, right?

Sure.... So, now you can close this post, and go lose a pizza because I've made no sense to you.

But before you do that, read on here just a little more....

When you learned to drive a car back in high school driver's ed, didn't they show you grusome videos of what happens to people in an accident who didn't wear a seat belt? Didn't that just scare the shit out of you so that today, you don't even back your car out of the driveway without buckling up?

Hey, fear is a great motivator.

I trade better on fear than I do for money.

But that's because I lost $50,000 doing stuff the wrong way. I... do... not... want... that... to... happen... again....

I now so much fear a large loss that I don't even want to think about it. I set what some would call a 'tight stop' and am actually joyous when it gets hit.

I'm joyous because I know I just saved my account a potential huge loss.

I'm joyous because I know I can just reenter a new trade if price turns around.

And I'm joyous because I know that because I'm trading on the 5 minute chart, I'll have 12 opportunities an hour to decide if I want to enter another trade, and take another run at it.

If you're a longer term trader, say trading the daily, you'll have 20 opportunities a month to decide if you want to enter another trade, and take a run at it.

What more could you want?

You can stand at the side of the craps table and not bet until you feel the dice will smile on you. Correspondingly, you can sit at your desk and watch the chart until something viable presents itself in price action. As Jesse Livermore put it numerous ways:

Words of Wisdom From Legendary Speculator Jesse Livermore

"There is a time to go long. There is a time to go short. And there is a time to go fishing."

"To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate."

"It never was my thinking that made big money for me. It was always my sitting. Got that? My sitting tight!"

Don't complicate your life by trading for the money. Trade for the pips, and the money will come.

Video: Trading FOREX For A Pizza Is Tough