The baptism of fire is a biblical term referring to the moment when a person’s faith is tested. In forex, this term has come to refer to a trader going through the first run of losses or blowing up the trading account entirely. The baptism of fire is a time when a trader’s discipline is sorely tested.
Early on in trading, a trader will usually start out executing on a plan, but then bad habits set in. This can be moving stop losses to stay in a trade or doubling down to try and wait for a reversal or any of a multitude of other mistakes. Then, when losses mount and the margin call comes, a trader can either go back to the plan or get out of the game.
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