Millions of people are trading in Forex daily and many have genius ideas in their minds. When it comes to anticipating the trend, the most effective way is to analyze the trend based on available information and reach a conclusion.
Although this may sound easy but this needs you to go through a lot of processes. Traders are always willing to go to any lengths to make money and some believe opening more orders simultaneously will increase the balance.
This is how the concept of overtrading commenced in this industry. They all wanted to make money but accepting losses was difficult for them. To ease the pain, investors opened another order and waited to make a profit to break even. If you are considering this as a viable strategy, go through this article before making up your mind.
In this article, we will explain why this ingenious resolution never works. This sounds intriguing but the market works in different ways. As long as a person cannot identify the right patterns, he can never make a profit. Probably reading this material will give a novel perspective to the potential investors.
Frequent losing trades
Taking frequent trades is more like placing an empty bucket on top of another empty bucket and praying the first one gets filled up magically. Trading is all about statistical accuracy. Experts often misinterpret the data as they are humans.
Making mistakes is not wrong bug believing in the wrong ideology can immensely affect the performance. When a person is losing, he should stay away from investing. It is time to think about the flaws in your prior trades and identify what went wrong, and practice in the demo account to rectify them. This may take time but this is an investment. Not only is money deposited when a person opens an account, but he has also invested precious time and belief into it.
Think practically and don’t make an assumption. Most probably, all the orders will fail when a failure is occurring. It might not be due to a mistake made by an investor as the market changes constantly. When traders are losing, never trade.
Hold onto the position and observe. If the strategy is tight then probably the industry is experiencing turbulence. Wait till it’s over and read the news. To learn about the risk exposure, click here. Use the free resources at Saxo and develop your skills so that you don’t have to lose too much money.
Quantity does not assure a profit
This is an important lesson in Forex. Many believe that if they use high-frequency trading or are always engaged, this will translate into profit. The sector only rewards logical decision that has an accurate basis.
Sometimes a predictable trend disappoints because it changes. If the volatility analyzed, it would have revealed that the price was going in another direction. Never mind the quantity but try to place quality trades.
You will discover professionals open very few positions in a month. As they have a high volume, the amount is big but they do not start investing in every period of high volatility. They wait until favorable volatility appears and then invest.
They never panic when temporary fluctuations arise and wait patiently. Although the number of trades is low, the amount made and the success rate achieved is quite high.
This makes the difference between winning and losing money. Trade not when your mind is telling you to, but when there is an opportunity. Never dump your capital into empty markets because you will not get a good return.