Limits that shouldn’t be crossed in Forex

by Susan Paige
0 comment

Having a fall down while walking on the slippery steps are very common in this industry. Most of the investors are trying hard to make money and when there are easy opportunities, people seem to go with all the fund. This is something that should never be done in Forex. Although it sounds attractive as the reward gets enormously high, so does the risks of failure. In this article, we are going to explain some of the boundaries that should never be over crossed. No matter at what stage of career you are, always be humble and stay within the limits.

Never be bold, trade with the trends

This is the first rule of thumb in this sector. As long as the pattern is favorable, it is safe to invest the capital. Whenever there is a change of trend or the market is becoming unstable, it is high time to pull off the investment. Do not be curious and try to see what happens when the volatility is against the strategy. This is one of the reasons why many novices failed to make money. Only 5% of the traders are successful but that does not say using absurd methods. Wait for the right opportunity and when it comes, jump to get a reward.

Keeping trades open for too long

It is a bad habit of greedy traders. After winning profits, they seem to become money-hungry a start keeping the winning investment open. It only takes one good blow on the account to swipe away all the profit that has been slowly made. Unless there has been enough evidence which shows it can be profitably done, there is no logical reason to undertake this dangerous procedure. Remember, it not only endangers the fund but also the fate of a successful decision. The experts’ advice to aim for smaller targets and exit the market as quickly as possible when the achievements are completed. Timing is very crucial in Forex.

Using an aggressive strategy

Many new traders in Australia often trade the market with an aggressive trading strategy. CFD trading is a very sophisticated business and you must strong analytical skill to find the best possible trades. Though the use of aggressive strategy might secure some good trades but considering the long term outcome, you are most likely to lose a big portion of your investment. The pro traders never risk any amount which they can’t afford to lose. Most of the time they stick to the basic 2% rule of money management and trade the market with proper discipline. Try to use a simple rule and maintain a trading journal so that you can find the weakness in your trading strategy.

Never ignore the importance of demo account

This is a blessing given by the authority through the brokers. Many smart people have tried their luck in stock trading but have failed miserably. If there is no way to practice to become better, it would have taken a lifetime to learn currency trading. At every stage of life, always keep practicing and learn from the previous mistakes. We know it sounds like a grandpa talking but is true to every word. Even small negligence can fail to produce a profit.

Never become too much creative

This is one of the hidden dangers that keep waiting especially for the novices. As this sector is continuously evolving, it is natural to presume innovations can play a big role in profit-making. This decision is a suicidal thought as it not only derails from the track but also ignores the facts and figures upon which the fundamentals stand upon. Before using a groundbreaking concept, make sure this has been practiced for a few times in demo account. Analyze and evaluate the results until there are consistent outcomes. Stay within the limits and try to invent new methods and techniques based on the principles.

Leave a Comment