The Investor Diary Entry #81: August 28, 2025
This blog post is a direct companion to my latest video diary entry. In it, I document a crucial phase in my trading forex journey: moving from trial and error to building a foundation on two non-negotiable pillars. After three years of learning, I’ve realized that becoming a successful Forex trader isn’t about a secret indicator—it’s about mastering risk management and crafting a trading plan that truly works for you. This is my experience in making those pillars strong.
The Two Pillars of Trading Success
My journey has taught me that lasting success in the markets rests on two core foundations. Without both, trading becomes gambling. The first pillar protects your capital, and the second gives you a method to grow it consistently.
Pillar 1: Building a Bulletproof Risk Management Plan
For me, risk management is the shield. It’s the most important part of learning to trade Forex. I’ve written extensively about it, but it all boils down to three crucial questions that form your money management plan:
1. Determining Your Risk Per Trade
Risk Per Trade is the percentage of your account you’re willing to lose on a single trade. The common advice is 1-2%. However, with my new system, I’ve chosen to risk only 0.5% per trade. Why? This lower percentage allows me to open more positions simultaneously while staying within my total risk cap. If I risk 1%, I can only have about 3 trades open at a time. At 0.5%, I can have up to 6 trades open, giving my system more room to operate without jeopardizing my account.
2. Setting Your Risk-to-Reward Ratio
This ratio, which is also called the RRR, measures the potential profit of a trade against its potential loss. I adhere to a minimum 1:2 risk-to-reward ratio. This means for every dollar I risk, I target a two-dollar profit. This disciplined approach ensures that my winning trades can cover my losing ones and still generate profit. The system I’m currently testing often provides opportunities with even higher ratios, which is a significant advantage.
3. Calculating Your Lot Size Precisely
Your lot size is not a random choice; it’s a calculation based on your risk percentage, account balance, and the distance to your stop-loss. I use a practical tool, fxverify.com, to do this math precisely. For example, with an account balance of approximately $921 and a risk of 0.5%, a stop-loss set 30 pips away dictates a specific lot size. This meticulous calculation is non-negotiable for protecting my capital.
I don’t waste my time doing this calculation on every trade, because there are different factors that go into the calculation and each currency pair has its own pip value. Therefore, I simply use a calculator, a free calculator, to come up with the appropriate lot size for each trade.
Pillar 2: Developing a Trading Plan That Speaks to You
The second pillar is your sword—your trading plan. A plan is useless if you don’t have confidence in it. The journey to find a suitable trading plan involves books, YouTube, paid courses, and subscribed services.
The Search for a Suitable System
I discovered a system based on Smart Money Concepts (SMC) that focuses on market structure, trading ranges, and order blocks. What resonated with me was its rule-based, almost mechanical nature. It uses pure price action—lines and dots on the chart—with no indicators, which perfectly suits the free version of TradingView.
Adoption, Not Just Adoption
This is the most critical step. I did not just copy the system. I adopted its core principles and then adapted its rules to fit my mind, my lifestyle, and my risk parameters. For instance, I modified which order blocks I take and imposed a strict 49-pip maximum stop-loss to align with my small $1000 test account. A trading plan must be yours; you must be relaxed and sure of its rules to follow it consistently.
Eliminating the Guesswork
I spent years with the “classical school” of analysis—trend lines, support/resistance, and Fibonacci. While I respect it, it involved too much guesswork for me. I was never truly relaxed. This new, more mechanical approach removes that subjectivity. I can take a loss and understand exactly why it happened according to my plan, which eliminates emotional stress.
How the Two Pillars Work Together for Confidence
These pillars are not separate; they are deeply interconnected. A solid trading plan identifies high-probability opportunities, and strict risk management ensures you survive long enough to capitalize on them. Together, they form the bedrock of trading psychology. When you trust your plan and know your risk is strictly controlled, the emotional challenges of trading become much easier to manage.
Conclusion: The Path Forward – Demo, Backtesting, and Patience
My journey is ongoing. I have not yet reached the goal of consistent profitability. The next phase involves rigorous backtesting and demo trading with my adapted plan. I have set specific Key Performance Indicators (KPIs) for myself. I will not transition to a live account until I have met those goals in a simulated environment, even if it takes me into a fourth year of learning. This discipline is how I respect the hard-earned capital I intend to trade with.
This is my path. I share it so others on the same journey might find value, whether by agreeing with my approach or by solidifying their own through a different perspective.
The Investor
Thursday 28 August 2025
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second, as a place where I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links, I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
This blog is also part of something else I’m learning: blogging. I’m using a platform to learn that part. And if you’re interested in that it is called Wealthy Affiliate, look it up.
For more detailed information on my affiliate disclosure, please refer to the Full Affiliate Disclosure page.
Furthermore, this site is in no way or form giving any financial or investing advice, nor is it encouraging or discouraging people to buy or sell any financial instrument. This is a personal diary in which I track my own progress and share it for informational, educational, and entertainment purposes.
I really appreciate how transparent you were about your journey—it’s refreshing to hear someone talk honestly about the years of trial and error instead of selling the idea of quick profits. The way you broke down risk management into clear, actionable steps really resonated with me. I’ve made the mistake of skipping proper lot size calculations in the past, and I can see now how that was essentially gambling with my account.
What stood out most was your point about adopting a system versus just copying one. That’s something I’ve struggled with—trying to fit into someone else’s strategy without really making it my own. Reading how you adapted the rules to suit your mindset and account size gave me a new perspective on consistency and confidence.
Your two pillars—risk management and a personalized trading plan—are exactly what I’ve been missing in my own approach. This post has motivated me to revisit my plan and make sure it’s something I can truly trust and follow without second-guessing. Thanks for sharing your experience—it feels relatable and practical for anyone serious about trading long term.
Hello Jannette, I am glad that you found the article useful, and I hope you had the time to watch the video with the article, as it shows in more detail the concepts in the article.
Wish you all best.
I know trading and investing can be extremely profitable, but I admittedly know almost nothing about it. I really respect your transparency and willingness to share your entire journey with those of us less experienced and knowledgeable, but the whole thing still feels overwhelming.
I understand the concept of risk management, but I still can’t quite wrap my head around building a plan. For someone who is a complete and total beginner, no knowledge, no experience, but wants to learn the ropes, what would you say is the very first step?
Hello Steph,
This is a very important question.. The simple asnwer is divided into two options, and I prefer that both are taken. Find biginners course in your region. Not online, if there is one that is offline, that would be great. Still if there is an interactive online course, that is fine as well.
The second one, is find general books about trading. It should be general, I think I have mentioned a couple of them in one of my blogs, yes here it is.
Once you know those basics, turn into this blog again, as my next blogs will concentrate on my trading plan and from where I learned the basics of this plan. I will link to this guy’s youtube channel because watching his plan made me able to design my own based on his, but not copying his entirely. I designed something that suits suites me.