Tested Forex Strategies: Learn The Proven Strategies Of Forex News Trading by Wayne Walker
Author:Wayne Walker [Walker, Wayne]
Language: eng
Format: epub
Tags: trading, forex, The practical guide for forex & stock trading, stock
Published: 2017-03-19T07:00:00+00:00
Trading Tactics
Here we will examine the major reasons why traders lose money and most important we will explore the solutions.
Unrealistic Expectations
It is important when getting into trading, as with many things, one must have a realistic idea of what you are dealing with. Unrealistic expectations can take the form of someone starting with what is sometimes called a mini-trader account of 1,000 or maybe 2,000 USD and expecting overnight riches.
I have even seen where you can even begin with 100 or 200 dollars which is fine. There is nothing wrong with the amount, but those same traders at 100 or 200 dollars are expecting to have 1,000 or 2,000 dollars in their accounts within a few weeks or even in a couple days. There are firms out there who have actually mentioned or even promised them that they can do this. While I am not saying it is impossible, I am saying it is unrealistic. It is essential that you do have a sense of reality to your trading.
No Plan
No plan as we have discussed, would be similar to arriving at an airline counter and saying “give me a ticket”, which does not make much sense. With planning, your trading needs to have an alignment of timeframe and the results that you are expecting to receive.
If you like FX then it is a good idea to stick with FX and build a base from there and later explore other instruments. Maybe even begin trading FX futures because once you have a good understanding of FX then you can start looking into offshoots of it, for example in the futures markets.
If you are familiar with trading equities then you might want to explore CFDs (Contracts For Difference) which are equity derivatives. They are traded by active traders. Again it is all working with the plan that you must have to begin.
Too Much Risk
It could be the person with 100 dollars in their account or even 100,000. It is not the amount that is critical, but the amount you are risking in relation to the funds available.
A simple example, if you have 10,000 USD in your account and are trading a 100,000 EURUSD position, each pip is 10 dollars. This is not that much, which is fine depending on your risk profile. If you then switch to trading a 1,000,000 position each pip is now worth 100 dollars. If you have 10,000 USD in your account and you are long, a 10 pip move lower leaves you automatically with a loss of 1,000 dollars.
Confusing Trading With Investing
In my years as a banker, I have had countless clients who I had to again and again point out that they should not confuse the two. Trading is about making money, it is income generating activity. You are moving in and out of trades, unlike investing which is more long term. It could be that some of your investment goals are derived from your trading but do not confuse them.
The instruments that you are trading, for example FX which is active, you are not investing you are trading, and hopefully earning income.
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